Tanker scrapping is forecasted to increase in the coming months
Tuesday, 20 November 2012 | 00:00
The tanker market is looking for an improvement in rates achievable for tanker owners, but for that to happen, scrapping activity has to go further up and oil demand as well. According to recent market outlooks provided by two major tanker shipping companies, the current trend is a mixed one. Nordic American Tanker (NAT) said last week that seaborne imports of crude oil into the US have not increased over the recent past. "Going forward, shale oil and tar sand oil projects may impact the US and Canadian oil sector. The European economies are making progress in agreeing to unified banking terms and financial assistance packages. European economies, however, continue to run significant deficits and face mounting debt, while resistance to deficit reduction measures remains strong. The economies of the Far East generally show continuing growth, although at a slower pace than before. At the current pace, annual crude imports into China will total a new record high in 2012" said NAT.
Tanker market rates are also affected by newbuildings that enter the markets, increasing the supply of vessels. Increased scrapping impacts supply in the other direction. As a matter of policy the company does not attempt to predict future spot rates. The daily rates as reported by shipbrokers and by Imarex may vary significantly from the actual rates we achieve in the market, but these rates are in general an indication of the level of the market and its direction. In any analysis of the tanker industry, the direction of the global economy is always the most important factor.
The Suezmax fleet (excl. shuttle tankers) counts 429 vessels at the end of 3Q2012, an increase of 20 since the beginning of the year. 10 vessels were delivered during the second quarter and 13 vessels are planned for delivery in the rest of 2012. The current orderbook stands at 66 vessels which represent 15% of the Suezmax fleet. At the time of this report, the orderbook for 2014 counts only 4 Suezmax vessels. Scrapping activity has increased over the last 6 months. So far this year 20 Suezmaxes have been scrapped compared to 8 during the year 2011. Given the current market condition we expect to see a further increase in the scrapping activity" concluded NAT.
In a separate market outlook provided to its stockholders, Teekay Tankers had mentioned that "Suezmax tanker spot rates weakened considerably during the third quarter of 2012, dragged lower by an extremely weak VLCC market, reduced demand for West African imports into the U.S. and an ample supply of available vessels. Aframax spot rates remained relatively steady during the quarter, although rates in the Atlantic were reduced somewhat by seasonal North Sea oil field maintenance. Rates have remained relatively weak during the start of the fourth quarter, although the recent end of the refinery maintenance season and the onset of winter weather conditions in the Northern Hemisphere could provide some support to crude tanker demand in the coming months.
Long Range 2 (LR2) product tanker rates improved during the third quarter of 2012 to the highest level experienced in two years. An increase in long-haul naphtha movements into Asia due to improved demand and refinery outages in Asia was the main catalyst for rate increases compared to previous quarters. Reduced competition for westbound gasoil cargoes from newbuilding crude tankers delivering in Asia also provided support to rates on those trades.
The global tanker fleet grew by a net amount of 14.6 million deadweight tonnes (mdwt), or 3.1 percent, through the first nine months of 2012 compared to growth of 22.0 mdwt, or 4.9 percent, for the same period of 2011. A total of 25.5 mdwt of tankers have delivered into the fleet during the first nine months of 2012, while 10.9 mdwt have been removed for scrapping or conversion. The level of new tanker ordering remains extremely low, with just 8.1 mdwt of new tankers ordered in 2012 to-date. As a result, the tanker orderbook has reduced to 62 mdwt, or 13 percent of the existing fleet, the lowest level since the first quarter of 2003 on an absolute basis and the lowest level since the second quarter of 2000 on an orderbook-to-fleet ratio basis.
As a result of continued headwinds in the global economy, the International Monetary Fund (IMF) recently downgraded its outlook for global GDP growth in 2012 and 2013 to 3.3 percent and 3.6 percent, respectively, from 3.5 percent and 3.9 percent in its July 2012 report. This has translated into lower 2013 oil demand growth estimates from the major forecasting agencies, with an average estimated growth rate of 0.8 million barrels per day (mb/d) for 2013 from the International Energy Agency (IEA), Energy Information Administration (EIA) and Organization of Petroleum Exporting Countries (OPEC)" Teekay concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide