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Tanker owners look to future demand and supply fundamentals for better days

Monday, 30 January 2012 | 00:00
With oversupply of oil tankers currently the major problem of tanker owners, ship owners are now turning their heads to the future demand and supply patterns in order to determine their next move on the market. To this extent BP's estimates, released this week, could offer some insight as to what to expect. London-based shipbroker Gibson said in its latest report, that "although at present the immediate threat for the industry is tonnage oversupply, in the long run factors such as slowing demand, environmental concerns, fuel efficiency and technological advances will be amongst the main drivers that will shape the future of the oil markets and with it, demand for tanker transportation" said the shipbroker.
According to the report, citing BP's research, Gibson said that "on the supply side, growth in global liquids demand is expected to be met primarily by increasing OPEC production, which would rise by 12 million b/d, with the largest gains in NGLs and crude output from Iraq and Saudi Arabia. Considering strong demand growth in developing Asia, increasing OPEC production is likely to be destined for these markets. Interestingly, BP anticipates that the Americas will largely become energy self-sufficient by 2030, due to strong growth in Canadian oil sands, Brazilian deepwater projects and US shale oil, as well as US and Brazilian biofuels. For tanker markets, this could mean the loss of long-haul trade from the Middle East" said Gibson.
It went to mention that "although the outlook covers all energy sources, for tanker markets the emphasis obviously is on oil. Here, we highlight several points from the BP forecast that are closely related to our industry. Most importantly, BP expects growth in global liquids demand of 16 million b/d (oil, biofuels and other liquids) over the next two decades, rising to 103 million b/d by 2030. This compares with growth of 19 million b/d over the past 20 years. So, the percentage gain is slowing, from an average of around 1.2% p.a. to 0.8% p.a. However, a critical part of the outlook is that only 9 million b/d of the growth is expected to come from crude oil, with the rest coming from biofuels, NGLs and other fuels (incl. processing gains). China and India would account for more than 70% of demand growth, with consumption rising by 8 million b/d and 3.5 million b/d respectively. Demand in OECD countries is likely to fall by 6 million b/d" concluded Gibson.
Meanwhile, in the tanker markets this week, Paris-based shipbroker Barry Rogliano Salles, mentioned that "at least as far as VLCC tonnage is concerned, the Chinese New Year celebrations had a significant impact on the market. Global demand was rather silent but had been sufficiently anticipated with strong previous week’s activity to avoid too strong a decrease on rates. On an average basis, rates for voyages from the Middle East Gulf to the Far East dropped by 5 points at about WS60 which is still equivalent to daily returns close to USD 27,500 on the basis of a reduced speed of 13 knots. While potential Iranian threats on the local traffic persist, one anticipates demand to quickly resume over next few days and rates should stay fairly stable. Although tonnage in natural position in the western hemisphere remains pretty scarce, demand for such sizes of ships mainly deals with traffic to the East.
Worldscale rates achieved or lump sums concluded are still providing daily returns substantially higher than whatever is fixed from the Middle East" said BRS.
Moving on to the Suezmax market, the shipbroker's report said that "generally speaking, the Suezmax market has been quiet last week. The ‘highest’ activity has been recorded from West Africa where we have seen some instability. However, fluctuations have been limited to few points only with rates, on an average basis, remaining around WS80 for Wafr/US. We feel, though, that the weakness of the market is evident and a couple of fixtures below WS80 have now been concluded. Simultaneously, the Med and Black Sea markets were literally dead. That was the week when Turkish straits’ delays were reduced to a minimum. That means that charterers can now work Black Sea cargoes only 10/12 days before the laycan compared to the 20 days at least they needed earlier. The amount of cargoes worked from Med was not enough to give any brace to the market. Basis present market of 135,000t at WS82.5, the return on Black Sea/Med route is hardly fetching USD 20,000 per day" said BRS.
Finally, "Aframax owners in the North tried to dig in their heels, but an oversupply of tonnage still created a soft sentiment. Even though weather is getting colder, enquiry on ice tonnage is not intense enough to create any pressure. 100,000t ex Baltic lies at about WS82.5 and 80,000t cross-North Sea pays around WS95 (around USD 15,000/day). It has been a very slow week in the Black Sea/Med markets. Rates gradually fell and the cheapest numbers
concluded this week were reported around WS80. The majority of fixtures on quality tonnage though have been fixed around WS85/87.5 (hardly USD 5,000 per day) but due to the quick
turnaround ex Black Sea, we fear that rates won’t improve for the time being. After strong ups and downs, the short Caribbean voyages have ended the week on a rather strong tone with rates between WS135 and WS140 (about USD 20,000/day)" concluded BRS.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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