HANSA 01-2019

Schifffahrt | Shipping
2018 – the nadir
in the tanker market?
What will 2019 hold for the still volatile tanker market?
Experts believe that the sector has reached the bottom after
a largely poor 2018. For the new year, OPEC production
cuts, trade wars and Iran sanctions set the scene
In 2018, fleet growth for both crude and
oil product tankers were low. But as the
demand growth was even lower, freight
rates hit the lowest level ever. The overcapacity
in the market expanded, says BIM-
CO’s chief shipping analyst, Peter Sand,
»The tanker market is really a curious case
these days,« he puts it. In the VLCC sector,
the market had seen the highest number
of ships sold for demolition, 34 units
until December 2018. This matched the
number of 1999, which had been the highest
since 1986.
But volatility has returned to the tanker
market in Q4 2018. Conditions across
the crude and products markets have seen
rapid improvement. BIMCO had expected
freight rates to improve in Q3 and Q4,
but what happened with crude oil tankers
wasn’t foreseen: Freight rates made
an exceptional comeback. Monthly average
VLCC earnings in April and May
were below 4,000 $/day, they moved up to
7-8,000 $/d in June and July and 11,000 $/d
in August and September – all in the loss
area. But October saw average earnings
shoot up to 33,500 $/d. Oil product tankers
were still suffering, despite somewhat
higher freight rates in early November.
»After a largely poor year for the tanker
sector, the simultaneous uptick in crude
and products markets continues to support
the idea that a key driver in tanker
spot market volatility are oil prices,« says
Tim Smith, Director, Oil and Tanker Markets
at Maritime Strategies International
(MSI). According to Smith, seasonal demand
is playing a role as autumn maintenance
programmes are completed and refineries
increase run rates. New refinery
start-ups in Asia are also driving up crude
import demand and adding to an amply
supplied Asian product market.
VesselsValue Senior Analyst Court Smith
attributes the rate strength in the winter
months to the »heavy level of ship recycling«
reported throughout the year. »It
is interesting to note that the rate recovery
52 HANSA International Maritime Journal – 156. Jahrgang – 2019 – Nr. 1