GOTHENBURG, Sweden,
May 27, 2021 /PRNewswire/ -- Our
belief in a structurally driven strengthening of the tanker market
from the second half of 2021 stands firm. In addition, we are now
also seeing short disruptions having a quick effect on the market.
This is a clear indication that, despite everything, we have a
market in relatively good balance.
In recent times, we have once again seen how quickly conditions
can fluctuate in the tanker market – due to changes in supply or
transport flows of oil. We saw it during the Evergreen situation in
the Suez Canal and the Colonial Pipeline cyberattack, which cut off
the flow of oil pipelines between the Gulf of Mexico and the US East Coast. Almost
half of the consumption of refined oil products on the East Coast
is supplied by these pipelines and in the space of just a few days
the Atlantic market for product tankers had risen by almost one
hundred percent – to then fall back again after just a short period
of time. And this happened with the American "driving season" on
the near horizon. Fears of gasoline shortages led to long queues
and more than 12,000 gas stations in the South ran out of fuel.
Moving towards a market in better balance
Looking at the longer-term development of the market, we
maintain our belief that it will return to balance. One of the main
drivers is rising oil consumption:
- The world currently consumes about 96 million barrels a
day, but only produces about 94 million barrels a day.
- This is what has finally brought stocks down to the 5-year
average.
- To avoid any further depletion of stocks, production now
needs to increase by about 2 million barrels per day – and we will
see this from OPEC+ over the next 3 months.
- In addition, we also expect to see oil demand gradually
continuing to rise from 96 MBD to 100 MBD as we enter the second
half of 2021.
Vaccinations and incentive packages
The fact that we are now seeing a gradual return to more
"normal" consumption of oil is due to developments in the external
environment. Mass vaccination against Covid-19 is progressing
strongly in many parts of the world and, together with the
incentive packages already implemented or about to be made
available, this is driving increased mobility, consumption and
industrial production.
Increased flying
In the United States, the
number of air travellers at the end of March
2021 was double that of a year earlier. It is obviously
impossible to predict the pace at which this trend will continue,
but the fact is that the vaccine is now here and means that many
will want to travel and meet up again.
Clouds of concern
Of course there are clouds of concern – there always are. In
addition to causing great human suffering, the development of the
coronavirus pandemic in India is
also impeding the recovery of the country's demand for oil. In
addition, rising tensions in the Middle
East are currently creating uncertainty. In the tanker
market, repealed sanctions against Iranian tankers could lead to an
increase in available tankers, which to some extent could affect
the freight rates.
An even stronger 2022
Forecasts for 2022 indicate further market improvements, driven
by continuing growth in demand for oil and therefore also for
tanker transportation. Demand for crude oil and product tankers is
expected to increase by 4-5 percent in 2022, returning to just
above 2019 levels. At the same time, growth in the tanker fleet is
expected to be low. In recent weeks, we have seen an increase in
orders for container ships in particular – but it is still the case
that very few new tankers are being ordered. Increased demand for
shipbuilding capacity has now led to longer delivery times. It
would normally take 1.5 years to get a ship delivered (after
ordering) – it now takes 2-2.5 years. All in all, this is likely to
help prolong the strong market that we, and many others, now see
before us.
Just as with the pandemic, it is all about persevering and
hanging in there. Better times are waiting around the corner.
Kim Ullman, CEO
This Market Update is also available on the Concordia
Maritime website via this link.
For more information, please contact:
Kim Ullman
CEO, Concordia Maritime AB
Tel: +46 31 85 50 03
Mob: +46 704 85 50 03
Email: kim.ullman@concordiamaritime.com
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