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Supply Scenarios and their Impact

April 30, 2021

We receive a lot of questions from colleagues and clients regarding the current state of the tanker market and, of course, the outlook we see for the short and mid-term.  In short, our analysis shows that the current tanker market is essentially in the hands of owners and their decisions on how to develop their fleets going forward.

To reach this finding, we looked at different tanker supply scenarios with the VLCC market as a reference, this time wanting to provide a simple visual that can tell a cohesive story.  In this analysis, demand and supply data in the VLCC ...

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Where do Vintage VLCCs Go?

April 23, 2021

There have been a few news articles lately discussing the strength of the secondhand VLCC market, in spite of overall VLCC earnings remaining very low in an oversupplied market.  This paradoxical market behavior is raising some very valid questions.  Who buys these VLCCs, what are they doing with them and why are they not being scrapped, especially now that iron ore supply chain volatility among other reasons has brought scrap prices to high levels? To answer these questions, we dove into our AIS and commercial transaction information to observe the “behavior” of VLCCs over the age of 15 that have ...

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Initial Findings from an EEXI Analysis on the VLCC Fleet

April 16, 2021

The International Maritime Organization (IMO) set forth its Greenhouse Gas (GHG) Strategy in 2018 with the goal of reducing carbon intensity by 40% up to 2030 and by 50% up to 2050 from a 2008 baseline.  With this strategy, the IMO tightened the parameters of the Energy Efficiency Design Index (EEDI).  The EEDI refers to energy efficient ship design, setting the minimum required efficiency while leaving design and technology considerations to builders.  The EEDI applies to vessel being built or that will be built.

In November 2020, the IMO amended MARPOL Annex VI to include a new efficiency standard, the ...

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Bunkers and Freight; Fact or Fiction?

April 9, 2021

The question of if and how bunker prices affect freight rates, admittedly, is one that gets repeated quite frequently.  After multiple years of forecasting and market modelling, our answer to it is that, under “normal” market conditions, bunker prices do not play a significant role in how tanker rates develop.  For example, when HSFO price dropped to nearly a half in 2015 from a year ago, VLCC benchmark TD3 freight rates trended significantly higher; when HSFO bunker gained US $100/mt in 2017 from 2016, TD3 reversely lost almost 23% year-over-year.

However, with the bunker price surge in the last ...

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An Update on VLCC Floating Storage

April 1, 2021

It would not be an exaggeration to say that tanker market participants were on edge today as the OPEC+ decision was revealed to the market.  The agreement from today’s meeting could be considered a surprise, this time benefiting tanker owners as production levels are set to rise beginning in May and trend higher through July, at least.  As part of the accord, Saudi Arabia will return 100% of its 1.0 million b/d voluntary cuts between May and July, skewed more heavily towards the latter months.  In addition, OPEC+ members (including Saudi Arabia) will add 350,000 b ...

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