The tanker market is expected to experience a positive 2023, according to the majority of analysts. In its latest weekly report, shipbroker Gibson said that “whilst 2022 ended with a fanfare, there is now a quieter feel for tanker markets as we step into 2023. The first Baltic Exchange assessments this week showed some notable red on TCE earnings relative to the values recorded in late December, particularly for crude tonnage. Despite the drop, however, earnings remain healthy, and owners are looking optimistically into the year ahead”.
According to Gibson, “the tonne mile transformation of tanker flows is far from complete, particularly on the clean side where Russian clean product exports jumped in December, with the country maximising product exports ahead of the February deadline. For crude, we have seen international tonnage and G7/EU service providers engaging in Russian crude trades post Dec 5th, with market forces pushing Urals pricing below $60/bbl. Yet, the announcement that Russia will ban the supply of crude oil and oil products from Feb 1 st for five months to nations that abide by the cap means that Russian companies will most likely not be able to provide necessary documentation to demonstrate compliance with the price cap and hence G7/EU service providers will no longer be able to participate in Russian trade. Although initially this means that the mainstream market is likely to be flooded with tonnage that previously lifted Russian barrels, fundamentally this supports the continued exit of ageing tonnage into a “niche” Russian market and hence over time will restrict tanker availability for non-sanctioned trades. Meanwhile, new IMO regulations, such as CII and EEXI will negatively impact vessel trading flexibility, also encouraging the exit of the ageing tankers into illicit fleet later in 2023”.
Meanwhile, “the recent notable changes in China’s Covid policy, if maintained, will aid the country’s economic growth and its oil demand over the longer term. Ultimately, this will benefit the long haul crude trade from the Atlantic Basin into Asia, once the rebalancing of flows into Europe is complete. In the short term, however, a massive Covid wave is a bearish factor for Chinese crude demand. Yet, a nearly 50% hike in the first batch of Chinese product export quotas for 2023 is likely to keep product exports at elevated levels, maintaining crude inflows, particularly if refining margins in the East remain healthy, with growing volume of products being pulled West”.
“Nonetheless, headwinds remain. Sizable OPEC+ production cuts, with the actual decline in exports coming entirely from the Middle East, are yet to be fully felt by the crude tanker market. Regional exports will be further pressured as Middle East refining runs are projected to increase substantially this year due to a large-scale refining capacity expansion over the 2022-23 period. At the same time, alarm bells over the health of global economy are ringing somewhat louder. The IMF has recently warned that 2023 will be tougher than last year, with Europe, the US and China seeing their economies slowing. Tightness in tanker supply, which became apparent in the 2nd half of the year, will also be somewhat alleviated by new deliveries, albeit not critically. New additions are trending lower YoY, with just 133 tankers above 25,000 dwt (non-Russian) scheduled for delivery in 2023, compared to 184 units delivered last year”, Gibson said.
“Still, on balance it seems there are more positive indicators than negative, with increases in tonne mile demand and flattening supply curve prevailing over economic turbulence and prospects of lower crude exports out of the Middle East. Although we may not see the repeat of the same spectacular volatility in freight, fundamentals suggest that supply/demand balance is likely to remain tight this year”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide