New Deliveries to Keep LR Freight Rates Down

Illustration; Image Courtesy: WSC

Freight rates for the Long Range (LR) tankers are expected to remain low for the rest of this and the next year, according to a tanker market update from McQuilling Services.

“Based on the developments witnessed over the first seven months of this year, we have adjusted our expectations for 2017/2018 down slightly in our Mid-Year Update; however, for the long-term, we project rates to follow the same slope of a slight recovery,” the market outlook reads.

Hence, on a Time Charter Equivalent (TCE) basis, LR2 owners are expected to earn an average of USD 11,000/day in 2017 and USD 11,700/day in 2018. For LR1 owners, anticipated earnings are USD 8,500/day in 2017 and USD 9,300/day in 2018.

Despite the likely demand growth within the LR1 sector, McQuilling said that freight rates will face downward pressure from a stable vessel delivery schedule over the next few years, while the LR2s will remain pressured from both sides of the equation this year.

“According to our forecast models, 18 LR2 vessels are left to hit the water before the end of 2017, while nine more LR1s are projected to enter the fleet. With a full-year deletion schedule of six vessels (5 LR2s and 1 LR1) for 2017, we expect considerable freight rate pressure to stem from vessel supply,” the industry note adds.

“Year-to-date, we have observed relatively healthy contracting in the LR2 sector with 12 firm orders reported,
which remains above levels witnessed since 2014.”

There have been no orders placed within the LR1 sector during the first seven months of 2017.

In addition, scrapping is projected to remain relatively subdued over the forecast period due to the young age of the overall LR fleet.

Taking these factors into account, McQuilling expects the LR2 fleet to expand by an average 6.9% over the forecast period, while the LR1 sector is on track to experience a more modest 4.3% growth on average over the next five years.

Share this article

Follow World Maritime News

In Depth>

Events>

<< Nov 2017 >>
MTWTFSS
30 31 1 2 3 4 5
6 7 8 9 10 11 12
13 14 15 16 17 18 19
20 21 22 23 24 25 26
27 28 29 30 1 2 3

Maritime Information Warfare 2017

Maritime Information Warfare will focus on the growing need for navies to develop their information exploitation capabilities…

read more >

INTERNATIONAL GREEN SHIPPING AND TECHNOLOGY SUMMIT

The Summit will gather key marine experts and companies around the globe which have a big influence in the industry…

read more >

The CWC 18th Annual World LNG Summit & Awards Evening

The CWC World LNG Summit will continue to give you access to premium networking opportunities as it brings together the who’s who…

read more >

Marintec China 2017

The largest maritime event in Asia Pacific, Marintec China connects maritime professionals from the entire shipbuilding supply chain together.

Over the years, Marintec China has grown to reflect the size and importance of the Asian maritime market. 2015 event is another record-breaking edition with the largest exhibition area and the highest number of industry professionals attending ever. The encouraging figures proven that China remains one of the major shipbuilding nations and Marintec China has been the most authoritative platform in Asia.

With the maritime industry facing great opportunities but also many challenges, it is important for the industry to connect and engage more to ultimately win new business in globally-significant markets. A visit to Marintec China is a great way to learn about the latest technology and innovation of the supply industry, a platform for industry professional to meet face to face, make connection and do business.

Marintec China is poised to be the definitive event and is undoubtedly a must-attend for all involved in the maritime industry.

Marintec China will be held from 5 to 8 December 2017 at the Shanghai New International Expo Centre in Shanghai, China and continue its dedication to serve as the “LEADING” platform “CONNECTING” the community and “STRENGTHENING” the maritime industry.

Marintec China offers the perfect opportunity for companies serving the maritime market to showcase their innovations, products and services to a wide audience. A platform for face to face meetings in business, creating new relationships and consolidating existing ones.

More info

read more >