According to a McQuilling Services Outlook report for 2011-2015, global economic recovery is underway, supported by robust emerging markets growth. Expectations are for a continuation of this trajectory in 2011, leading to increased oil demand, but risks to the downside still exist, particularly in the area of sovereign debt. Tanker demand recovered in 2010 and will increase on the back of increased oil demand. The patterns of trade are changing however, leading to new routes and deployment considerations.
Spot freight markets increased in 2010 over 2009, in line with our expectations and our 2010 forecast was within 1.2% of actual market levels for the year. Bunker prices were 6.5% higher than forecast but our TCE revenue expectations on VLCCs were within US$ 600 per day of the $30,800 observed in this sector. MR2 tonnage fared about 20% better than we expected, averaging about $8,500 per day on a round-trip basis.
Bulging orderbooks are still a worry for the industry but a surprisingly large number of delays and cancellations mitigated their effect last year and will undoubtedly lessen their impact this year. The IMO 13G phase-out requirement is past however, taking 150+ vessels last year, so we expect no relief from the exit profile in 2011. Net fleet growth is still positive across tanker sectors and spot freight rates for the next few years will remain pressured. We expect a recovery towards the end of the forecast period as the shipping cycle recovers. Asset prices are currently felt to be overvalued and due for a correction. Traditional ship finance remains tight for a second year but transactions are being concluded and alternative forms of funding have been employed.
This is the backdrop against which firms must develop some basis for the planning of their future business activities and for projecting their performance. This brief presents the McQuilling Services Outlook over 11 tanker trade routes for eight tanker sectors through 2015. A discussion on the global economic context for the Outlook, methodology and quantitative results is included.