Industry Note No. 17 - Med Market on the Move
The Mediterranean market is witnessing a change in supply fundamentals as easing political conflicts and upstream developments revitalize crude production in the region. In this note, we will examine the potential impact on tankers from higher Mediterranean crude supply in the context of the recent Organization of Petroleum Exporting Countries’ (OPEC) production cut.
Industry Note No. 16 - Offshore Floating Systems Snapshot
Download McQuilling Services 2016 Offshore Floating Systems Snapshot for a quick look at the age profile of the offshore floating fleet, size distribution, major deployment locations as well as newbuildings under construction and vessels undergoing conversion
Industry Note No. 15 - Distance Dictates Demand
In this note, we analyze bilateral country trade flow data through July in order to more accurately understand the development of Dirty Petroleum Product (DPP) tanker demand from 2014.
Industry Note No. 14 - Tanker Supply: A Gift and a Curse
Tanker demand is an essential component in the performance of the tanker industry, dictating trade volumes and tanker routes. The supply side of the equation is equally important as the volatility of fleet growth may have a pronounced impact on freight rates. Our historical ton-mile data for crude/dirty petroleum product tankers (DPP) and clean petroleum product tankers (CPP) shows relatively steady annual demand growth of 1-3% on average, allowing for the ebbs and flows of supply fundamentals to influence the direction of the market. In this note, we will discuss our tanker supply expectations and potential impact on freight rates over the period 2017-2020.
Industry Note No. 13 - The US Makes an Eastern Entrance
The Brent to West Texas Intermediate (WTI) spread has fluctuated over the years, with Brent posting a premium to WTI in most cases. For the tanker market, the value of this variance has gained further importance since the removal of the US crude export ban because it provides cargo holders with new commercial opportunities, dictating tanker trading patterns and global tanker demand. In this note, we will discuss our views of the Brent/WTI spread, its impact on US exports and how tanker demand may be affected.
Industry Note No. 12 - Mid-Year Update Scorecard
As a supplement to this year's 2016 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 2016 forecasts. The one-page format makes it a perfect desk reference that can be used through the balance of 2016.
Industry Note No. 11 - Global Chemical Glut May Slip
This Chemicals Industry Note was produced by McQuilling Services Singapore and provides the group’s forecast of an anticipated glut in new chemical capacity over the next 5-7 years and how their view differs from the strong claims regarding China’s capability in commercializing this projected supply.
Industry Note No. 10 - Floating Storage Opportunity
As we noted in a recent industry note: No. 8 – Plenty of Suitors For These Older Ladies, an increasing amount of spot fixture activity has been carried out by disadvantaged tankers in 2016 year-to-date. Meanwhile, a good amount of older tankers have also been fixed for operational floating storage in the time charter market this year due to a lack of onshore storage facilities. However, over the last few weeks, we have observed a notable shift toward inventory drawdowns from refiners, reducing the need for this type of floating storage. As one cause for floating storage is abating, a new one may be emerging: the recent strengthening of the US Dollar amid “Brexit” has pressured spot crude prices more than forward levels, revealing short-term arbitrage opportunities conductive to floating storage.
Industry Note No. 9 - Naphtha Exiting the European Union
In this note, we are delighted to welcome JBC Energy as a guest co-author, allowing us the opportunity to provide the tanker industry with unique insight into the outlook for West to East naphtha tanker flows in the second half of 2016 and the impact on corresponding clean tanker rates. Located in Vienna, Austria, JBC Energy has an established reputation as a leading research institute offering independent and unbiased expertise for the global energy sector.
Industry Note No. 8 - Plenty of Suitors For These Older Ladies
The recent weakness in VLCC spot rates has revealed an increasing amount of fixture activity carried out by “disadvantaged” tankers. Chartering older tonnage is nothing new to the tanker industry, despite increasingly stringent vetting requirements by terminal operators and charterers. While the majority of charterers implement a maximum age restriction of 15 years old for tankers, we note that this requirement becomes somewhat more flexible when freight rates firm, which can be seen from the significant increase in disadvantaged fixtures this year, following a favorable 2015 freight rate environment for owners.
Industry Note No. 7 - Caribbean Carousel
The Caribbean market for dirty tankers is beginning to heat up amid increasing volumes of crude oil from Colombia and Venezuela heading to the US Gulf refining system, coupled with the strengthening of US crude and stable condensate exports from the US Gulf to the Caribbean. This expanding trade flow dynamic has introduced a regional triangulation element for Aframax tankers operating in this part of the world. In this note, we examine the reasons behind the increasing flows and assess the future outlook on earnings potential for owners trading in this region.
Industry Note No. 6 - The Teapot Refinery Effect
Chinese independent oil refiners, better known as teapot refineries, were granted additional crude import licenses this year by the Chinese government, allowing them to import as much as 0.88 million b/d. By using AIS position data, we observed a significant rise in the number of oil tankers either in port or anchored within 60 miles of the port from the beginning of the year as a result of strong demand from these refiners. To learn more about the impact these delays have been having on the VLCC spot market, click the PDF icon above to download this industry note.
Industry Note No. 5 - What's Supply Got To Do With It?
Net fleet growth has historically been a primary factor that influences freight rates in the long-term, while short-term supply disruptions such as inclement weather, port delays, slow steaming and vessel maintenance can also cause rates to be volatile and less predictable. Market participants have been keeping a watchful eye on tanker supply developments this year as many of the vessels from the bloated orderbooks of the previous years are expected to deliver, triggering concerns of a weakening tanker spot market. So how much net fleet growth have we recorded for each tanker sector in the first quarter?
Industry Note No. 4 - Invest in Aframaxes? Yes, Please!
Identifying emerging trends is the cornerstone of managing risks accordingly and maximizing returns on investment. For the tanker markets, our analysis indicates that Aframaxes may be on the verge of reversing the downward trend in demand experienced over the last four years ending in 2015. From a supply perspective, the aging profile of the Aframax fleet, coupled with a relatively modest orderbook, are likely to support a relative out performance of earnings over the medium term, making these tankers an attractive investment at current levels.
Industry Note No. 3 - 2016 Tanker Market Outlook Scorecard
As a supplement to this year's 2016-2020 Tanker Market Outlook, we've developed an "Outlook Scorecard," which provides a snapshot of previous market behavior as well as 2016 forecasts. The one-page format makes it a perfect desk reference that can be used throughout the year.
Industry Note No. 2 - Back in Business - the Iran Effect
The removal of sanctions levied against Iran is likely to impact global tanker trading patterns. Traditional Iranian customers in Southern Europe and Asia have moved expeditiously to execute supply agreements. The return of Iranian supply to Southern Europe will likely compete with Iraqi production while Japan’s shift to Russia in recent years may be put in jeopardy. India’s appetite for Iranian crude may pressure similar grades from the Caribbean, which in-turn may re-ignite traditional short-haul trades in the Atlantic Basin.
Industry Note No. 1 - 2016-2020 Tanker Market Outlook
McQuilling Services 2016-2020 Tanker Market Outlook represents our nineteenth forecasting cycle since beginning this activity. Our forecast is based on the evaluation of historical and projected tonnage supply and demand fundamentals in the tanker market within the current and projected global economic environment including oil supply and demand expectations. In formulating our outlook, we balance the output of data-based quantitative methods with experiential knowledge. Our full-year 2015 projection from last year’s Tanker Market Outlook tracked within 5% of actual market levels on the 15 trades forecasted. For the nine DPP trades, the original forecasts ended the year within 3% of recorded levels, while the six CPP trades ended within 7%.
