Ton Mile Demand Growth to Propel Tanker Market Forward

The tanker market is expected to benefit from further growth in ton-mile demand. In its latest weekly report, shipbroker Xclusiv said that “the International Energy Agency (IEA) has reported a significant slowdown in global oil demand growth, with the second quarter of 2024 seeing the lowest increase in over a year (710kb/day). Despite a temporary uptick in OECD oil demand, primarily due to increased gasoil and naphtha deliveries, overall global demand growth is projected to remain subdued in 2024 and 2025 at 970kb/d and 980kb/day respectively. Conversely, global oil supply is on the rise, with 2Q24 production up 910 kb/d from 1Q24, driven primarily by increased production in the United States and other non-OPEC+ countries. Output is forecast to rise by another 770 kb/d in 3Q24 with non-OPEC+ providing 600 kb/d of the gains. While OPEC+ has announced plans to gradually unwind production cuts, the overall trend points to a growing oil supply. Global supply growth in 2025 is projected at a much stronger 1.8 mb/d, with non-OPEC+ countries (mainly the United States, Canada, Guyana and Brazil) leading gains for a third consecutive year, adding 1.5 mb/d. The combination of slower demand growth and increased supply is expected to lead to a decline in the call on OPEC+ crude in the coming quarters”.

According to Xclusiv, “Asia dominates the global seaborne crude oil import market, accounting for approximately 61% of the total. Europe follows with a 25% share, while the Americas (North and Latin) contribute 10% combined. The remaining 4% is distributed among other regions. The Middle East holds a dominant position in crude oil exports, representing 43% of the global total. Latin America and North America occupy the second and third positions, respectively, with export shares of 13% and 12%. Since 2023, Middle Eastern crude oil exports have declined by approximately 3%, while Latin America and North America have experienced export increases of 10% and 11%, respectively. Despite the estimation for a marginal increase in overall seaborne crude oil trade volume in 2024, estimated tonne-miles will be risen by 3% to reach 10,800 billion tonne-miles for the year”.

Meanwhile, in the dry bulk market, the shipbroker commented that “China’s coal imports surged in the first half of 2024, driven by a perfect storm of high demand and low supply. Brutal heatwaves in June jacked up electricity demand for air conditioning, while lower domestic coal production forced China to import more to keep the lights on. During the first six months of 2024, China imported 249.5 million tonnes of coal, almost 12.5% up compared to the first half of 2023, with its June imports accounting for 44.6 million metric tons. Furthermore, China’s appetite for iron ore and copper were also stronger during the first half of 2024 compared to the similar period of 2023. From January to June 2024, China imported 13.9 million metric tons of copper and 611.1 million metric tons of iron ore, which is almost 3.7% and 6.2% up compared to the same period of 2023”.

The shipbroker added that “the dry bulk market enjoys a prolonged period of healthy rates. Interestingly the average BCI for the first half of 2024 is 2,871 points, almost 16% higher compared to the average of 2,465 points of the previous semester and almost double the average points of the first semester 2023. Similarly, the average BPI and BSI for the first semester of 2024 is 1,757 and 1,278 points respectively, around 14% up each compared to the average of second half 2023, and 34% up each compared to the average of first half of 2023. Finally, the average of BHSI has also experienced a 17% increase averaging to 699 points in the first half of 2024 compared to second half of 2023, while is also 25% up compared to the average of the first half of 2023”, Xclusiv concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide