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Caribbean Fundamentals Pressure Demand

Feb. 27, 2018

In our 2018-2022 Tanker Market Outlook, we explained our future expectations of weaker Aframax demand along the Caribbean > US Gulf trade, which accounts for roughly 4.7% of total sector ton-mile demand.  In January, we stated “On the other side of the Atlantic, the benchmark Caribbean > US Gulf trade collapsed by 11.3% in 2017 as a result of lower Venezuelan exports at the expense of longer-haul trades.  In 2017, Venezuela’s crude only exports to the US are estimated total 25.5 million tons.  Slowing Venezuelan production is expected in the medium term with as much as 300,000 ...

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Tonnage Supply Adjustments

Feb. 22, 2018

Port delays extend the duration of a voyage and reduce tanker availability.  In extreme cases this can have a significant impact on short-term freight rates. Over the past years, we observed how extended delays can create upward pressure in the market.

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Asset Market Review – VLCC

Feb. 20, 2018

Over the course of 2017, VLCC tanker values exhibited price depreciation for the second consecutive year, as the market fundamentals put pressure on earnings.  Newbuilding contracts averaged US $82.8 million (basis Korea/Japan), a decline of 8.5% from 2016 average values; however, the second half of the year is pointing to a firmer market as yard capacity remains constrained and owners, backed with charter coverage, look to capitalize on the lowest annual prices since 2003 (Figure). 

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European Aframaxes

Feb. 15, 2018

In 2017, Aframax demand rose 0.6%, largely in-line with our January 2017 forecasts.  Growth was observed in European regional trading, with the Southern Europe > Northern Europe route climbing 10.3%, while the intra-regional Southern European trade grew by a similar 10.1% as higher crude  supply from Libya and Ceyhan (1H) provided regional refiners with advantaged feedstock pricing and supporting both margins and product output.

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Deletion Forecast Methodology

Feb. 13, 2018

We continue to analyze and enhance our own forecasting methodologies with each annual Tanker Market Outlook cycle and this year is no different as we have improved our long-term deletion forecast methodology.  Deletions from the trading fleet can occur through demolition or conversion of tankers to storage operations.  In each of these cases, the owner has made a fundamental decision based on unique characteristics of their financial situation, market view and investment criteria.  In previous Tanker Market Outlook editions, our criteria for determining future deletions from the fleet were the 15th, 20th and 25th ship anniversary.  In ...

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CPP Tanker Ton-Mile Demand

Feb. 6, 2018

In examining bilateral country trade flow data, we recorded a 2.1% rise in CPP ton-mile demand distributed across the four tanker segments we analyze (Figure).  At 2.23 trillion ton-miles, CPP marine transportation requirements make up 17.3% of all tanker demand, the highest on record.  By comparison in 2000, CPP marine transportation accounted for just 7.79% of total tanker demand.

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