The current state of weakness across the various parts of the tanker industry, both in the product, as well as in the crude tanker markets, indicates that until a better balance is found among tonnage supply and demand fundmentals, tanker owners are bound to increase scrapping of their older vessels, while at the same limiting their rate of investment in newbuildings. According to the latest weekly report from London-based shipbroker Gibson, which focuses on tanker supply fundamentals, between 2006 and 2009, the rate of growth in product tanker capacity far exceeded increases in the crude sector. "In fact, around mid-2009 the product tanker fleet was growing at the equivalent of 16% p.a. (in dwt terms ), twice the rate of expansion in the crude tanker fleet. However, since then the situation has reversed radically, with a rapid slowdown in growth in product tanker supply, whilst increases in the crude tanker fleet have remained around 4-8% p.a. So, for the past year the product tanker fleet has grown by less than crude.
The situation today is that the product fleet is up by around 3% from September 2011 levels, compared with close to 5% for crude tankers" said the shipbroker.
It added that "the slowdown in growth for product tankers has come with the 2009 collapse in new investment and subsequent slowdown in new deliveries (scrapping has remained relatively stable at around 2-3 million dwt p.a.). In the crude tanker industry there have been periods of high investment even since 2009 and this has supported more new deliveries. So, even though the levels of crude tanker scrapping have doubled sin ce 2009, tot more than 10 million dwt p.a. now, these removals have not been enough to put a halt to crude tanker expansion".
In the coming months, Gibson estimated that "the current dire state of the crude tanker market means little new investment and likely further increases in scrapping; so more limited growth over the next 1- 2 years. In our own forecasts we expect crude tanker capacity to grow by only 2% p.a. by the end of next year. The products sector is a bit more uncertain, and there has been a lot off talk about the ‘over-ordering’ of MRs. Although there has been a rise in investment in MRs, this is nowhere near the dizzy heights seen in 2006/07 and supply growth here is also forecast to fall, to only 1% p.a. by the end off next year. So, tanker supply will continue to grow, but only at minimal levels. It therefore falls to the demand side to pull the tanker industry out of its current terrible position for owners – which may be questionable in today's economic conditions and something that owners have no control over!" it concluded.
Meanwhile, in the tanker markets this week, in the MiddleEast, Gibson said that "as we gradually come to the conclusion of the September VLCC programme owners can feel that through their grit and determination (and a high bunker price) has seen them regain some long lost ground. Rates haven't moved up much by comparison to the end of last week but to maintain those levels against a far quieter week will be seen as an achievement. Presently voyages East command levels 270,000 mt at WS40 and to the West WS 27-28 was obtained on min 280,000 mt. No spotlight on the Suezmaxes though and subsequently some discounting was seen. Last done to the West was WS43.75 on 130,000 mt and Eastern voyages currently at WS75. A quiet start to the week for Afrmaxes as Appec was in full flow, but once normal service was resumed owners were able to secure some slight gains as interest built. Last seen is 80 ,000 mt x WS120 for the East" it said.
In the Mediterranean this week there was, "noticeably more enquiry and fixing this week on the larger sizes has helped to thin down the list of ships waiting for employment. However, this has had no significant effect on rates which still hover or dip below breakeven for most owners. The decision 'to commit or not' to longer or shorter employment at low rates is still a difficult one for owners to make and take them out of what has previously been a lucrative market in the autumn /winter months. Aframaxes in the Mediterranean, what do they cost. Well, much like your local no-frills grocer, you can pop in and pay exactly what is on the sticker knowing that you are getting a good deal. No bartering is needed here; there is plenty of supply and this continues to keep rates at the very bottom. A bottom no less, which is providing Owners with less and less reward as the bunker price steadily increases. Expect to pay 80,0000mt x WS 72.5-75 level for a vanilla cross-Mediterranean voyage and a couple of points more for a voyage loading in the Black Sea for med discharge. No change is in sight" Gibson said.
Finally, it concluded that it was "another week in the North Sea where rates remain in a state of paralysis. Lower numbers have been tried by Charterers but re-buffed by owners and for all intents and purposes we seem to have hit the bottom. This is where things look to stay with a tonnage list that can easily cater for the upcoming end month enquiry. North Sea is fixing at 80,000 x WS85 which would be for a standard voyage like West Coast Norway/UkCont. The Baltic is fixing at similarly low numbers with a standard Primorsk/Wilhelmshaven 100kt REBCO cargo going at WS60. Next week expect more of the same as until we see a serious shift of tonnage possibly aided by poor weather, rates look unlikely to move" Gibson concluded.