The tanker market’s long term fundamentals appear to be quite favorable, as the global orderbook is still at just 3% of the total fleet, while oil production and demand are expected to remain at healthy levels moving forward. In its latest weekly report, shipbroker Intermodal said that “with a robust US growth of 5.5%, bringing volumes to 18.8 million bpd this year, it is predicted that global oil output would increase by 1.3% to 101.7 million barrels per day in 2023. On the demand side, due to weakening economic trends, the world’s demand for oil is expected to climb by about 2 million bpd in 2023 after rising by over 2.4 million bpd in 2022. Two major factors will propel demand through the year: rising jet fuel consumption and improving Chinese demand. OECD European and North American growth would be muted this year, with volumes hitting 13.5 million bpd and 24.8 million bpd, respectively. This decline could be partially offset by an estimated growth in Chinese demand of 970,000 bpd y-o-y”.
According to Intermodal’s Research Analyst, Ms. Chara Georgousi, “the fundamentals indicate that although there will be typical fluctuations, they will occur at greater levels. The need for oil is recovering, while the replacement of ships occurs at a slower pace. Tanker demand has increased on the back of the realignment of trade flows triggered by sanctions imposed on Russia after its invasion of Ukraine in 2022. At the same time, dirty tankers’ fleet growth is estimated at 1% in 2023, compared to 4% in 2022. OPEC+ appears rather bullish about China, and if demand is robust, imports will be sourced from the Atlantic rather than the Persian Gulf, boosting ton-miles and decreasing the impact of supply cutbacks on freight. Time-charter rates for periods up to one year are currently robust reflecting the market’s expectations for increased freight in the short term. On the other hand, OPEC+’s recently announced oil production cuts have partially softened the previously bullish outlook for the crude tanker sector, as they are anticipated to cause some softness in the oil market, particularly in the VLCC segment. However, the impact may be reduced if the cuts are lifted earlier than expected. Overall, global oil tanker market conditions are still anticipated to stay firm through 2023 on the back of the currently supportive supply-side factors, as well as positive demand drivers”.
Meanwhile, “secondhand prices of crude tankers have surged to a 25-year high, after falling at their lowest level in 2020, as owners scramble to benefit from the increasing ton miles associated with Russia’s conflict in Ukraine. Older VLCCs are still widely sold on the second-hand market and are sold at unprecedented prices. Currently, most VLCCs are largely being sold to Chinese buyers, while Middle Eastern and Indian buyers seem to mostly prefer Suezmax and Aframax vessels”, Ms. Georgousi said.
“Currently, the total number of crude tankers on order is 80, a figure that represents 3% of the total fleet. Out of them, 53.75% will be delivered within 2023 and almost half of them are Aframax vessels. Despite a peak in ordering activity at the beginning of the year, the orderbook is currently standing at the lowest level in 25 years amid extremely tight capacity in shipyards. The current fundamentals in the tanker newbuilding market are extremely buoyant for the second-hand market”, Intermodal’s analyst concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide