(EnergyAsia, June 21 2013, Friday) — Despite a projected 5% p.a. rise in demand through 2018, the oil tanker market faces a struggle to recover as it “is still blighted by surplus capacity”, according to the latest findings by UK-based consultant Drewry Maritime Research.
“Prompt excessive ordering” could overwhelm the projected healthy 5% growth rate that will take tanker demand to 420 million dwt by 2018, said Drewry’s latest Tanker Forecaster report.
Tanker owners might catch a break from 2014 if the existing phase of overcapacity eases, with improved demand and some slowdown in supply growth. But this is not assured as investors might be tempted to make new orders given the current attractive prices for new builds.
“With seasonally weak demand in the second quarter, the short-term view for freight rates does not look positive. Global oil demand declined by 1% in the first quarter of the year to 89.9 million b/d, although some recovery in demand is likely in the second half of the year based on seasonal demand, which will push overall tonnage demand higher by 2% in 2013,” said Drewry.
A continuing supply of fresh tonnage through the year could put a lid on prices.
With 46 million dwt already added since 2010 and a further 17.1 million dwt (4%) due this year, utilisation will be poor and freight rates will not show any noticeable signs of recovery.
Longer term, the sector could be helped by an order slowdown and perhaps a gradual recovery of the world economy, with utilisation due to improve from 2014 along with a shift in trade patterns to support long voyage rates.
Drewry expects crude oil shipping from the main producing countries in Latin America, Africa and the Middle East to refineries in Asia to increase gradually, but this will be somewhat offset by weak shipping demand to the US and Europe. European refineries are experiencing shrinking margins while those in the US face rising domestic production and little expansion.