In February 2017, the average confidence level expressed by respondents was 5.6 out of 10, unchanged from the previous survey in November, 2016 and equal to the highest rating since August, 2015.
Owners were the only main category to show an improved level of confidence, up from 5.4 to 5.6. Confidence on the part of charterers was down from its all-time survey high of 6.8 to 5.9, while that of managers fell from 6.4 to 6. Confidence levels in the broking sector, meanwhile, dropped from 5.6 to 4.6.
Respondents generally felt that competition was running at very high levels, while other familiar concerns included over tonnaging and geopolitical uncertainty. Most respondents saw 2017 as a year of retrenchment rather than improvement.
One said: “If owners can maintain their discipline and resist the blandishments of shipyards desperate for business, there is hope that 2018 will see a return of market equilibrium, in which continued scrapping remains a key element.” Another noted: “The current state of most shipping markets, coupled with the weakness of banks, means that conditions should be more attractive for alternative lenders.”
The likelihood of respondents making a major investment or significant development over the next 12 months was unchanged for the fourth successive quarter, at 4.9 out of 10. Managers’ expectations were up from 5.2 to 5.6, the highest level since August 2015. Owners’ expectations were also up, from 5 to 5.1, but those of charterers and brokers were down, from 6.4 to 5.8 and 3.8 to 3.4 respectively.
The number of respondents expecting finance costs to increase over the coming year rose by one percentage point to 54%, the highest level since November 2011. Owners’ expectations of increases fell from 58% to 57%, while the figures for brokers were also down, from 53% to 41%. Managers were of a different mind, with 61% expecting increases as opposed to 52% in November 2016.
Demand trends overtook competition as the factor expected to influence performance most significantly over the next 12 months, followed by finance costs and tonnage supply. “Competition is so intense at the moment,” said one respondent: “that you either accept what is offered or a competitor will take the cargo.”
The number of respondents expecting higher rates in the tanker market over the next 12 months fell by eight percentage points to 25%, while the number anticipating lower tanker rates rose from 24% to 28%. The net sentiment in the tanker markets was -3 (compared to +9 in November, 2016).
In a stand-alone question, respondents were asked to identify the price range they expected crude oil (per-barrel) to be in 12 months’ time. The most popular estimate was the $50-$59 range, identified by 38% of respondents, as opposed to 19% in the February, 2016 survey. Some 12% of respondents opted for the $40-$49 range, compared to 26% last time.
The $60-$69 price range was favoured by 29%, as opposed to just 5% one year ago. In February, 2016, 31% predicted crude oil prices to be in the $30-$39 price range, whereas just 1% did so this time.