GÖTEBORG, Sweden, June 3, 2022 /PRNewswire/ -- The product tanker
market has strengthened significantly during April and May, with
market rates at much higher levels than for both Q1 2022 and the
full year 2021. At the end of May, average spot market earnings for
an MR vessel (clean) was about $36,000 per day*. The time charter market has
also strengthened and a three-year contract for an MR tanker is
currently $15,000-18,000 per day,
depending to some extent on the vessel's design. For a suezmax
vessel, average spot earnings are about $22,000 per day**. Volatility in the segment has
been high during April and May, with occasional peaks at levels
above $60,000 per day.
The VLCC segment is still at historically very low levels, which
also imposes an indirect "cap" on suezmax vessels as charterers
will combine two cargoes onto one larger vessel if suezmax segment
rates become too high.
New trade patterns bring increased transport needs
The stronger product tanker segment is not only due to continuing
high demand for oil but also changing trade patterns as Russian oil
products are phased out in certain markets. This applies
particularly to European diesel imports, which are now increasingly
coming from the Middle East,
Asia and North America. Overall, the phasing out of
Russian oil has resulted in longer transport distances and
increased transport efficiency.
The drivers also include structural changes in global refining
capacity, where the impact of refinery closures in North America, Europe and elsewhere is now beginning to be
felt in earnest. The fact that overall refining capacity has
decreased west of Suez but has increased in Asia and the Middle
East means longer transport distances, which is affecting
the entire tanker market.
High oil prices affect earnings
It should be noted that average earnings are just an average. For
both the MR and suezmax segments, earnings vary greatly depending
on the type of vessel and geographical trading. By way of example,
freight rates in the Atlantic have generally been higher than in
Asia. Similarly, clean products
have paid better than dirty ones. The difference in earnings is
also due to a continuing high oil price. Since early March 2022, the price of Brent oil has been at
levels above $100/barrel - and is
currently at about $120/barrel. Large
differences in bunker consumption between vessels of different age
and design have in turn contributed to significant variations in
earnings between "standard" vessels, modern ECO-design vessels
and/or vessels equipped with "scrubbers***".
Longer distances
Geopolitical instability is also very likely to continue affecting
oil and tanker markets going forward. Since the invasion of
Ukraine, both the oil and tanker
markets have been gradually trying to adapt to the new situation
and we have yet to see the end result of this as sanctions continue
to be imposed and trade routes are changing. However, increased
European imports from more distant producers are likely to
continue.
Meanwhile, according to the IEA (International Energy Agency),
global oil demand is expected to grow by 3.6 million barrels per
day from April to August 2022. The
main contributory factors are eased restrictions in China, the US driving season and a continued
recovery in aviation fuel demand.
All in all, this promotes a continued "cautiously optimistic"
view of product tanker market development for the remainder of Q2
and the rest of 2022.
For our part, as previously announced, our vessels are employed
on a five-year charter to Stena Bulk. The base rate is $15,500 per day. There is also the possibility of
profit-sharing for freight exceeding the base rate, calculated on
the basis of average earnings per vessel per half-year. Stena Bulk
employs the vessels on a mix of short and medium-term contracts in
both Asia and the Atlantic.
Gothenburg, June 2022,
Erik Lewenhaupt, CEO
* Clarksons Average MR Clean Products Long Run Historical
Earnings
** Clarksons Average Suezmax Long Run Historical Earnings
*** On-board exhaust gas cleaning, enabling the vessel to use a
cheaper type of bunker/fuel.
CONTACT:
Erik Lewenhaupt
CEO, Concordia Maritime AB
0704-855 188
erik.lewenhaupt@concordiamaritime.com
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http://news.cision.com
https://news.cision.com/concordia-maritime/r/market-update-strong-tanker-market-due-to-sanctions-and-high-demand-for-oil,c3580040
The following files are available for download:
https://mb.cision.com/Main/1948/3580040/1588675.pdf
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Concordia Maritime -
Market update - 20220603 (PDF)
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