Clarkson expects tanker market to remain strong until fall

The last 6 months have marked the best tanker market in decades, reports Clarkson Research Studies, London. In its latest survey, Clarkson said a large proportion of the tanker fleet is trading on the spot market at rates between $30,000 and $80,000/day.


By the OGJ Online Staff

HOUSTON, May 30 -- The last 6 months have marked the best tanker market in decades, reports Clarkson Research Studies, London.

In its latest survey, Clarkson said a large proportion of the tanker fleet is trading on the spot market at rates between $30,000 and $80,000/day.

It said, "For the remainder of this year, the tanker fundamentals look reasonably solid. The fleet is expanding, but for the time being, world oil demand seems to be growing just as fast, and tanker owners are doing a good job of hanging onto the high ground they established last year.

"However, scrapping remains very sluggish and with [new construction the equivalent of] 12% of the fleet due for delivery by the end of 2002, the market is vulnerable to a supply-driven squeeze. So rates may start to be tested in the autumn."

Clarkson said the VLCC and Suezmax tanker segments both maintained the high earnings levels of late 2000, while Aframaxes were even stronger.

"However, the biggest improvement was for the products tankers, which surprised everyone during the closing months of 2000 by rocketing up to earnings levels of almost $40,000/day. That was quite extraordinary for ships that traditionally earned around $10,000/day. Given the very large number of ships trading on the spot market, that means that an awful lot of cash was made during the last 6 months."

Clarkson said the dominant feature of the tanker market last year was the switch of supply away from short-haul sources to the long-haul Middle East oil.

"World oil demand increased by 600,000 b/d, and long-haul Middle East exports increased from 12.1 million b/d in 1999 to 13 million in 2000. That was a 7.6% increase and quite a contrast to the 4.1% decline in 1999.

"During the same period, exports from the short-haul producers showed little growth. North Sea exports grew by 2.2% and the Caribbean by 1.9%. The only significant increase was in Africa, whose exports were up by 4.6%. However, the bottom line was a lot more long-haul oil being shipped, and consequently a multiplied impact on tanker demand."

Clarkson said that as of Apr. 1, about 55.6 million dwt of tankers was on order, and the 35.8 million dwt contracted in 2000 was the highest in more than 20 years.

It said 2001 should be another very good year for the tanker industry, since demand is expected to expand by more than 1 million b/d while the fleet will expand only 0.7%.

But it noted that only 1.6 million dwt was scrapped in the first quarter. "In reality, the financial temptations of a tight market are likely to keep many of the old ships at sea, allowing the fleet to grow faster than suggested by our forecasts," it said.

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