Crude carrier owners seem to have found their way out of the doldrums by taking a slice of the product tanker market.
The trend is gaining in popularity on the East to West string and product tanker owners are not happy.
So far this year, at least three very large crude carriers (VLCCs) have loaded East of Suez and sailed into the Atlantic Basin, according to the latest weekly report from Gibson Shipbrokers.
As explained, this practice impacts the product tanker demand both in the load and discharge region.
“This year when the Maran Aphrodite and New Eminence loaded gasoil in China and Malaysia, they collectively took a potential 11-15 MR cargoes out of the Asian product tanker market, negatively impacting regional tanker demand,” Gibson’s weekly report reads.
What is more, as these vessels moved closer towards discharge, the impact on regional gasoil pricing started to impact trading activity in the Atlantic which could result in losing of another 11-15 MR cargoes in the Atlantic market as well, the shipbroker added.
Overall, the demand for very large crude carriers (VLCC) is very weak, with daily earnings falling below USD 2,000 at a time when crude tanker fleet is not really growing, as explained recently by Peter Sand, Chief Analyst at BIMCO.
Oversupply of crude and geopolitical tensions are likely to make 2018 a loss-making year for owners in the sector.
The fundamentals of the crude carrier market are not expected to improve significantly until the second half of 2019.
Hence, the crude tanker owners seem to be desperate to find work for their ships, especially for maiden voyages, even if it means taking a slice of cargoes from product tankers.
Beyond VLCCs, Suezmaxes have also proved popular for moving gasoil cargoes from East to West on their maiden voyages, particularly out of the Middle East and India, Gibson said.
Further pressure on the product tankers is looming from the inbound newbuilding deliveries, with 130 VLCCs and Suezmaxes set to deliver by the end of 2019.
“Provided the crude sector remains under pressure, these tankers will continue to be used where the economics make sense, capping the product tanker markets potential,” Gibson added.
Therefore, product tanker owners will have to be patient and wait out for the influx of crude tanker deliveries to subside.
However, there is a light at the end of the tunnel for product tankers since the demand for these ships is expected to soar as the 2020 sulphur cap deadline approaches.
Due to the need for greater availability of low sulphur fuel across the globe, product tankers are set to benefit as they would need to transport this cargo to different locations worldwide.
This, in turn, promises to result in new trade routes and increase the ton mile demand.
World Maritime News Staff