Crude Tanker Market: Could this be right?
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 Reporter September 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Teekay LNG Partners Declare Distribution

Teekay GP LLC, the general partner of Teekay LNG Partners L.P. has declared a cash distribution of $0.70 per unit for the quarter ended September 30, 2015. The

TMS Cardiff Gas Orders First LPG Carriers

TMS Cardiff Gas Ltd. has signed a contract with Hyundai Heavy Industries of Korea for the construction of two 78,700 cbm LPG carriers with the option to build another two.

Odfjell's Tanker Overhaul Seeks to Slash Emissions by 20%

Norwegian tanker shipper Odfjell announced it is upgrading the propulsion systems aboard 19 of its chemical tanker vessels in a move that aims to reduce its fuel


Debris Appears to Belong to Cargo Ship Missing in Bahamas

Search and rescue teams on Sunday located debris which appeared to belong to the cargo ship El Faro that went missing in the eye of Hurricane Joaquin with 33 mostly American crew members aboard,

Woman Medevaced from Cruise Ship off SouthWest Pass

The Coast Guard medevaced a 50-year-old woman from a cruise ship 225 miles southeast of Southwest Pass, Saturday. Watchstanders at Coast Guard District 8 received a call at approximately 9 a.

Demands for Icebreaker Tours Spiral

Plans to terminate commercial tours to the North Pole on the nuclear-powered icebreakers of the Atomflot company in 2016 have surged the demand for these tours.

Maritime Careers / Shipboard Positions Maritime Security Maritime Standards Naval Architecture Navigation Pipelines Salvage Ship Simulators Shipbuilding / Vessel Construction Sonar
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: 0.1962 sec (5 req/sec)