Product tankers: Bulls are arriving… hopefully.

Catogory : Announcements

HOPES of an early recovery in product tanker earnings this year have not materialised, with persistent oversupply and destocking works still in progress. But fear not, optimists: there is always next year.

Long range two vessels are expected to achieve time charter equivalent rates of $15,781 per day in 2018, up from $12,323 in 2017, while rates for LR1s will rise to $12,997 from $10,234. Medium range ships will earn $13,736 per day, up from $10,774 this year.

The forecast recovery comes as fleet growth slows on the falling number of newbuilding deliveries. Meanwhile, total orderbook size continues to shrink amid fewer newbuilding orders.

On the demand side, global stock drawdowns might be finally completed sometime next year amid healthy fuel consumption growth, triggering more cross-region movements that can support tonne-miles. US and Middle Eastern refineries are ramping up their exports, just in time to meet the buoyant demand for products.

But there are also caveats. Scrapping remains slow, suggesting that vessel supply overhang may not ease at a quick pace after larger newbuilding tonnage hit the waters in the past two years.