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DPP Ton-Mile Demand Development

Aug. 27, 2021

Through multiple years of enhancement, our tanker demand analysis has gradually switched to use the AIS-drive “Ton-day” as the measuring unit.  However, the traditional “Ton-Mile” demand still serves as a key factor to reveal tanker’s transportation demand in our market fundamental analysis.  In the August Mid-Year Update published this Wednesday, we have updated our tanker Ton-Mile projections for the next five years, separated by each vessel class.

After the difficult 2020, this year is not likely to bring the much-needed relief in the tanker markets, as we correctly predicted in the January.  Our forecasts show that total crude and ...

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The New Asset Price Forecasting Model

Aug. 20, 2021

Asset values are traditionally correlated with the corresponding earnings environment, with more statistically significant relationships attributed to the period rates.  However, the recent climbing inflation rates, extremely tight yard capacity, surging steel prices have introduced significant bias to the correlation between asset values and tanker earnings.  Despite the persistent weak tanker earnings in the 2nd quarter, newbuilding prices have reversely firmed and reached the highest record since 2016.  Scrap prices, on the other hand, jumped from US $300/mt in mid-2020 to US $585/mt in August 2021, as these values are highly correlated with steel prices.

To measure the ...

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Demand Revisions: Will there be another hard Winter?

Aug. 13, 2021

The resurgence of the COVID infection rates due to variants in both East and West of Suez markets have again put significant uncertainty on the pace of global crude demand recovery, including forecasts made by oil industry players. 

The IEA made the news this week as the organization cuts its year-on-year oil demand increase in 2021 to 5.3 million b/d but raise the figure for 2022 to 3.2 million b/d.  In its monthly report, the growth projection for the 2H of 2021 has been downgraded more sharply by 500,000 b/d, as new COVID19 restrictions ...

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VLCC Drydocking: No Supply Side Relief

Aug. 6, 2021

In previous highlights we have demonstrate that the DPP tanker market is likely only going to find recovery with a relief coming from the supply side.  Aside from typical tanker additions and demolitions, there are other supply side variables we also took into account, including drydocking activity, floating storages and vessels taken out of the trading fleet due to sanctions or being arrested.

Drydocking, especially when it happens in irregular patterns can become a supporting factor for VLCC rates as tankers are removed from the trading fleet for approximately one month.  In our analysis, we see that 2018 was the ...

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