BIMCO’s tanker sector hopes and fears

Dec 20 2018

Ahead of BIMCO’s Reflections 2019, which will be available in full on 2nd January, 2019 Peter Sand has outlined his hopes and fears for the shipping industry.

Taking the tanker sector, he said that 2018 was a horrific year - probably the worst ever.

Crude oil tanker owners were particularly badly hit – the larger the ship, the lower the earnings.

However, October delivered a sudden reversal of fortunes, but no fundamental market balance changes that fast.

Next year will also prove to be a difficult one for the crude oil shipping sector – a major problem being US sanctions on Iran. These impact not just the oil market but – to some extent – crude oil tanker trade lanes.

A four-year, low fleet growth in 2018 cushioned some of the weak demand, but the aftermath of two years of 5-6% fleet growth proved too much to cope with.

BIMCO believed the massive demolition activity seen in 2018 will not be repeated in 2019. As earnings improve from the lows of 2018, owners will lose interest in selling ships for scrap.

Fleet growth next year is expected to exceed 2%. Market improvements will come from increased demand from new refineries coming online in China and increased US exports.

Combining the two demand drivers, we end up with a powerful cocktail that will benefit crude oil tankers strongly. However, don’t bet the farm that this will happen, Sand warned.

As for product tankers, the outlook is slightly more positive, but for different reasons.

For example, low fleet growth has teed up the market for improved earnings in 2019 when compared with the lows of 2018 when the market was bad, but not as bad as the crude oil tanker market.

One of the potential positive triggers in 2019 is likely to be distribution of IMO 2020-compliant fuels. To what extent this will boost the market depends highly on actual availability and production of fuels from the global refineries, Sand said.

Tanker Operator will bring you news of the full report once it is published. 

Previous: OPEC’s timing bad for tankers

Next: Texas VLCC terminal moves closer

Apr-May 2024

How TotalEnergies is decarbonising its shipping - Ardmore''s choice of VP technologies