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Better days for product tankers demand, but future still perilous |
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Friday, 26 February 2010 |
 Among the subsectors of the tanker market, the product tanker market, a place where there were many Hellenic ship owners placing their bets in the past few years, appears to not be out of the blue yet. In its full 2009 results report, one of the company’s active in this market, Italy’s d’Amico International Shipping warned investors that while the market has recovered from a dismal – for the most part – 2009, this uptrend is still quite fragile, thus it’s quite cautious on the future.
The company said that at the end of the past year and the beginning of
2010, the improvement noticed in the global economy, coupled with very
cold winter conditions, across the Northern Hemisphere, saw an increase
in demand, shich in turn was directly reflected in an improvement of
demand for oil products. But, the company also warned that this
improvement isn’t significant compared to previous years and is also
quite fragile as global economies gradually improve.
“The key drivers that should affect the product tanker freight markets
in 2010 and d’Amico International Shipping performances are global oil
demand and worldwide GDP growth and the large influx of new buildings
scheduled for 2010”, the company said, further analyzing the factors
which are expected to have an impact on demand this year. In DIS’
analysis “the best indicator of Product Tanker earnings on the spot
Market demand is the assessed Time Charter rate for one year Charter.
According to ICAP Shipbrokers, ACM Shipbrokers and Clarksons Shipbrokers
the assessed Time Charter rates has risen some 15-20 percent since the
end of Q3 2009. Albeit these levels cannot be considered high based on
historical levels, however the percentage increase is significant. This
in itself indicates an upturn in Spot market demand. There are still
significant investments in refinery capacity in the coming years
primarily within the Asian region, which should result in increased
tonne mile demand; according to the IEA, refinery capacity is expected
to increase by 8.7 million barrels per day for the period 2008-2014, of
which over half is in Asia. Any new refining projects seem to be
dominated by the Middle East, China and other Asia countries. Refinery
closures and reduced output have already occurred within 2009,
predominately within the OECD. New low-cost capacity in Asia will
increasingly force a rationalisation of old high-cost capacity in the
west, structurally favouring more long haul products trade. So as tonne
mile demand increases this should have a positive effect on product
tanker demand. The tonne mile demand has increased within Asia
throughout 2009 as demand has improved predominately within this region.
There is still expected further long haul seaborne growth in other
commodities such as palm oil and vegetable oil. These products can only
be carried on IMO classified vessels which should Increase demand for
these types of vessels. A further tightening of vetting and screening
procedures from oil companies, favouring modern, double hull vessels
operated by owners with full in-house ship-management and crewing.
In terms of supply DIS mentioned the following: “the forward net growth
of ships entering the Product Tanker market is growing but not at
anything like the pace expected on paper; A number of ships which were
scheduled to be delivered in 2009, considered one of the biggest
delivery years in recent history, were not and some will not be
delivered this year. They have been deferred, delayed, cancelled or
converted into a different ship type/size; • The number of Ships in the
25-55,000 deadweight segment that were “not Delivered” in 2009 according
to SSY, Clarkson’s, and ICAP Shipbrokers runs between 25 and 30
percent. The actual figure that has been deferred or delayed into 2010
will become apparent throughout the year. However with such a relatively
large percentage it is safe to assume a certain amount of these
deliveries has in fact been cancelled. In this respect the question
whether or not financing has been secured for forward deliveries is
significant!
2010 April is the deadline for IMO phase out of the remaining single
hull vessels from international trade. There is speculation that some
ships will be able to circumnavigate the deadline due to further trading
be it coastwise or storage is valid however we believe the figure will
be not significant. Scrapping of Tankers in 2009 and year to date has
now overtaken total for 2008 by almost fifty percent according to RS
Platou.
There are two other factors that even today positively reduce the supply
of Tankers. Firstly despite the increased investment in New Tankers
there has not been any significant investment in Port Infrastructure
that has led to increased Port stays and delays and thus reduced Supply.
The fact that a large number of owners have introduced slow steaming
due to high Bunker prices and the poor demand has also reduced the
supply of Ships, concluded the Italian ship owners.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
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