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 Reporter July 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Tanker Trends

Second Tanker Waits to Load Oil at Libya's Reopened Port

A second tanker is waiting to load oil at Libya's Es Sider port, state-run National Oil Corp (NOC) said on Thursday, as the country's biggest crude export terminal

Mozambique: $30b Invested for 2018 LNG Export

More than $30 billion will be invested initially in Mozambique's natural gas sector to build capacity to produce 20 million tonnes per year of liquefied natural gas (LNG),

The World's Most Expensive Jones Act Tanker

The series highlighting the world's most expensive active vessels from online ship intelligence and information service VesselsValue.com focuses this week on the most expensive tanker vessel,

News

Banking on US Shale Gas Boom, Asia Petrochemical Firms Switch to LPG

Asia petrochemicals firms are building tanks and retooling plants to store and process liquefied petroleum gas imported from the United States, counting on a flood

Danos Fabrication Facility Creates 150 Jobs

Danos, a family owned oil and gas service company, announced plans to expand its fabrication capabilities, by opening a 120,000 square-foot fabrication facility in Amelia, La.

US’ Largest Floating Drydock Heads to Portland

The country’s largest floating drydock, the Vigorous, is headed for Portland this weekend. The drydock, a piece of equipment used to lift vessels as large as cruise ships out of the water,

 
 
Maritime Contracts Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Port Authority Ship Repair Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | 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: 0.1607 sec (6 req/sec)