Crude Tanker Market: Could this be right?

MarineLink.com
Tuesday, November 26, 2013

VLCC rates of $60,000/day triggered a deeper dive in crude tankers, so DNB Markets (Shipping) looked into ~66,000 fixtures.

With increased interest in the crude tanker segment coupled with spot rates approaching $60,000/day, DNB decided to dig deeper into alternative data sources, as we currently rely on delete aggregated data (we mostly use BP data). DNB then bought 10 years of fixture history (some 66,000 fixtures) from Clarkson. Each of these fixtures has a loading port, discharge port, cargo size and lay/can. The implied (laden) tonne-mile demand was then calculated.

DNB’s current crude tanker demand balance indicated positive volume growth, but negative tonmile demand growth. However, the alternative fixture data set from Clarkson suggests that average VLCC sailing distances are up 9% since 2010, and up 15% since 2003, while suexmax average distances are up 8% since 2003.

The Clarkson fixture data findings suggest crude tanker demand growth of 14% annually over 2010–2013. The first questions are obvious: is there something wrong with our new set of data, and can this be true?

The main drawback in the data from Clarkson is that it does not include all trades in crude, simply because not all cargo exported is reported. To estimate the exact amount not reported in the Clarkson data is difficult. To mitigate the fact that the Clarkson fixtures will miss out on a substantial part of the total trade of crude, we use our previous demand estimates up to 2004 and then apply the ton-mile change in the Clarkson data from there. The result of doing this is obviously smaller percentage changes in the Clarkson data (for instance, the Clarkson data on a stand-alone basis indicates ~15% YOY growth in ton-mile demand in 2013, while when adjusting, this 15% becomes ~4%), but still above our current negative tonmile demand forecast of -2%.

DNB then used our current fundamental model with the alternative demand-side to investigate the consequences. On our current forecasts, the crude tanker space looks to be facing severe difficulties, as we estimate utilization of 76% in 2013, falling to 71% in 2015e. Applying the alternative demand figures from Clarkson, however, suggests fleet utilization of 92% in 2013. On the alternative utilization we note that 2013e is the first year in six years in which conventional utilization improves, which was the trigger point in our dry bulk fundamental model to allow for the rate improvements this autumn.

The major consequence of the alternative crude tanker demand is obviously a more optimistic view on the crude tanker space, with potential VLCC spot rates above $40,000/day in 2014e and 2015e, above our current $19,000/day forecast for 2014.
 

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter April 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Floating Products Storage in Focus

For much of 2015, talk of floating storage was dominated by speculation that the contango in crude futures might support crude floating storage, says Gibson Tanker Report.

Russia Diesel Exports from Primorsk to Rise in May

Russia is set to export 1.256 million tonnes of ultra-low sulphur diesel from the Baltic Sea port of Primorsk in May, slightly up from 1.209 million tonnes in April, trading sources said on Friday.

New Shipping Firm Sets up in Vancouver

A new shipping company has established itself in Vancouver as the Vancouver International Maritime Centre (VIMC) completes its Asia tour, launching in Tokyo, Singapore and Hong Kong.

News

Italian Ship Rescues 26 Migrants off Libya

An Italian merchant ship rescued 26 migrants off the coast of Libya in rough seas and others were feared missing, the Coast Guard said on Saturday. The Coast

Symphony Sun’ Launched in Leer

On Friday the 29th of April, Nb. 420 was launched in Leer. She was christened ‘Symphony Sun’ and is the fourth vessel in a series of 6 that will be delivered to Symphony Shipping.

ACR to Debut Pathfinder PRO SART at OTC

An important addition to any commercial vessel’s survival gear kit, the Pathfinder PRO SART is introduced by ACR Electronics, Inc. at this year’s OTC. The new search

 
 
Maritime Careers / Shipboard Positions Maritime Contracts Maritime Security Naval Architecture Navigation Offshore Oil Pipelines Ship Electronics Sonar Winch
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.0721 sec (14 req/sec)