The positive sentiment remains

Jun 05 2015


The tanker chartering market looks likely to enjoy a healthy period until the end of 2015, delegates at a recent seminar were told by industry leaders.

London broking house - Gibson Shipbrokers - held a timecharter seminar, at the end of May. The panellists included John Ridgway, CEO of BP Shipping and Paddy Rodgers, CEO of Euronav who were asked to predict the TD3 average for the rest of 2015.

Opinions ranged between $40,000 per day up to $86,000 per day.

The sentiment was largely positive, with earnings expected to remain well above those seen 2014.

For spot LR2 earnings on the Middle East Gulf/Japan (TC1), predictions ranged from $22,000 per day to $28,000 per day and the view on Brent crude prices varied between $55 per barrel to $70 per barrel.

What does the near future hold, Gibson asked? The supply of oil looks to be exceeding demand. However, this scenario cannot go on unabated. Thus far, record levels of crude production have not only encouraged trade to existing and new markets but also facilitated storage both on land and at sea.

Excluding the Iranian fleet, the broker’s figures at the end of May showed about 34 mill barrels of oil afloat on 14 VLCCs and two ULCCs, despite the contango not being in play.

The crude tanker fleet is essentially modern and, with around 100 VLCCs currently on order, this equates to around 15.5% of the existing fleet and needs monitoring. In the Suezmax sector there are some 75 ships on order, equating to around 16% of the current fleet.

Confidence is therefore more focused on the short term in the crude sector, which is reflected in the newbuilding market where prices have been cooling somewhat while secondhand and resales have found a more steady footing, illustrated by VLCC newbuilding prices being around $95 mill versus in excess of $100 mill for a resale.

There was certainly more confidence for the product tanker market in 2016. In Europe, refiners are expected to come under renewed pressure as new refineries in the Middle East reach capacity. At the same time, closures and capacity reductions in Japan will lend further support to product trade in the East.

All of these factors combined point to longer haul product trade as Middle East refiners fight for market share. However, the question still remains as to how much of an impact these new refineries will have on crude trade as OPEC continues to defend its share of the market, Gibson concluded.



Previous: VPS and DNV GL to look into fuel performance

Next: Orders continue unabated


June July 2025

Tanker Operator Athens report - MEPC 83 explained - decarbonisation by Norwegian shipowners