VLCC freight rates have fallen to year-to-date lows in recent weeks as this tanker sector remains awash with tonnage, despite growing demand for cargo transport. For the remainder of the year, we are likely to see weakness, relative to previous years, persist through the seasonally stronger winter period.
Hurricane season creates many challenges to the tanker markets; infrastructure is damaged, ports are closed for extended periods and tankers are delayed in loading or discharging cargoes. The freight rate environment exhibits volatility as a result of chaotic trading patterns required to mitigate the immediate impacts from the weather disruptions. In this note, we analyze how the disruptions from Hurricane Harvey impacted the tanker markets and what may be expected from Hurricanes Irma and Katia.
In this note, we present recent developments of the LR sector spelled out in our 2017 Mid-Year Update. Year-to-date we have tracked within 11% of our January forecasts for this segment. Based on developments witnessed over the first seven months of this year, we have adjusted our expectations for 2017/2018 down slightly; however, for the long-term we project rates to follow the same slope of a slight recovery.
As a supplement to this year's 2017 Mid-Year Tanker Market Outlook Update, we've developed an "Outlook Scorecard," which provides a snapshot of previous market behavior as well as updates to our 2017 forecasts. The one-page format makes it a perfect desk reference that can be used through the balance of 2017.