An ominous cloud seems to be hovering over the tanker market as the sector sails into what promises to be another challenging year for owners.
Specifically, 2018 is expected to be the busiest delivery year since 2010, according to Gibson Shipbrokers, with 40 million dwt of crude and product tankers (over 25,000 dwt) due for delivery, compared to the 35.5 million dwt delivered in 2017.
High hopes are being bestowed upon potential delivery delays as a way of providing some ease to the newbuilding tonnage influx in an already oversupplied market.
“Given the anticipated fundamentals for 2018, delivery delays are expected to remain a feature, and for the crude sector in particular, and could increase relative to 2017. However, the same fundamentals are likely to encourage scrapping activity; which, when coupled with slippage, could help offset some of the supply growth for 2018,” the shipbroker said.
In 2017, product tanker slippage was significantly high with LR1 slippage jumping to 38 pct. Aframax/LR2 sector deliveries fell 27 pct below the scheduled number, Suezmax slippage was at 21 pct while VLCC deliveries fell just below 11 pct, Gibson’s data shows.
Headwinds on the demand side are likely to persist as well, especially on the back of OPEC‘s output limits.
The International Energy Agency (IEA) forecasts positive growth of 1.3 million b/d; slower than recent years but above long-term averages.
In terms of markets to look out for, the U.S. is on top of the list as its crude production is expected to average 775,000 b/d higher in 2018, based on U.S. Energy Information Administration, much of which is likely to head for export. In addition, output growth is anticipated from Brazil, Kazakhstan and Libya, the shipbroker added.
However, it remains to be seen whether these will be enough to support the lifting of freight rates this year and perpetuate the badly-needed recovery of the market.