Industry Note No. 20 - European Product Balances Under Pressure
The European refining sector over performed expectations this year as regional crude supply rose on the back of higher output in major producing nations, pressuring feedstock costs for refiners and supporting margins. According to JBC Energy, it is estimated that the European region (Northern Europe + Mediterranean) will produce 22.9 million b/d of refined products in 2017, while demanding 20.9 million b/d, which would imply an 182,000 b/d rise in product balances year-on-year, basis 20.7 million b/d demand and 22.5 million b/d supply in 2016.
Industry Note No. 19 - Supply Side Dynamics
Fluctuations in the global supply of tonnage are a primary factor behind freight rate volatility. In 2015, DPP net fleet growth of <1% supported a surge in spot rates and TCE earnings, drawing owners to shipyards for new vessels. This pick-up in ordering activity has contributed to an acceleration of supply growth since 2016, and stands as a major factor behind the freight rate weakness currently observe in the market. In this note, we review the evolution of the clean and dirty fleets in 2017 as well as provide guidance through 2019.
Industry Note No. 18 - Kurdish Export Outlook Sours
News headlines have recently highlighted rising geopolitical tensions within the second largest oil-producing nation in the Middle East, Iraq. Geopolitical conflicts can have lasting impacts on global oil trade flows, therefore, in this note, we will explain the potential implications of political unrest in Iraq.
Industry Note No. 17 - Winter Wedge in VLCC Rates
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.
Industry Note No. 16 - Hurricane Season in Full Swing
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.
Industry Note No. 15 - LRs Lower for Longer
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.
Industry Note No. 14 - 2017 Mid-Year Update Scorecard
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.
Industry Note No. 13 -The Americas: An Export Market in the Making
The global tanker market is an ever changing landscape, constantly adapting to the volatility of oil market fundamentals, which are determined by regional price fluctuations and geopolitical events. Tanker owners may take advantage of emerging trade patterns that bring prosperous opportunities, while reducing their presence in markets that once boomed but are now faltering.
Industry Note No. 12 - 2017 Shuttle Tanker Snapshot
This snapshot provides an overview of the shuttle tanker market from January 2015 to May 2017. Due to the dense offshore oil fields and offshore floating tankers, EC South America and Northern Europe are the two major deployment regions for the shuttle tanker fleet. We have counted a total of 398 FPSO/FSO calls in EC South America and another 66 calls in Northern Europe through May 2017. The average age of the fleet stands at 10 years; the oldest tanker is the 1995-built Ifrikia Iii, owned by Teekay Navion.
Industry Note No. 11 - Go With the Flow
Recent strength in European product demand, coupled with higher outflows to the West, has boosted product margins and incentivized refiners to increase runs. We expect European crude demand to remain strong in the summer months, which will likely be filled by rising crude supply in the Mediterranean, Black Sea and West Africa. Higher volumes along these trade routes are projected to support Suezmax and Aframax tanker freight rates in the coming months.
Industry Note No. 10 - Balancing Act
This industry note provides an overview of VLCC market activity for the first quarter of 2017 including vessel supply developments as well as McQuilling Services' short-term views for the second quarter of the year.
Industry Note No. 9 - VLCC PE Multiples; Buy, Hold or Sell
In the financial markets, investor sentiment for stocks can be measured using PE (Price/Earnings) multiples. We believe this statistic to be an applicable tool for pricing physical tanker assets, while in parallel, revealing underlying market confidence levels. In this note, we discuss our methodology to harmonize the PE formula to tanker assets and project the range which VLCC tankers are likely to trade in over the medium term.
Industry Note No. 8 - The Latin American Story
Not only is Latin America a major end market for petroleum products, many of its emerging economies have become big players in the upstream sector of the global oil market. In this note, we will discuss the trends we have observed in Latin American crude exports over the past few years, the impact on tanker trade flows, and our views on 2017 developments.
Industry Note No. 7 - 2020 Bunker Regulation - "A Refined View"
This note was authored by our industry partners, JBC Energy, a boutique oil market research company, with regard to the upcoming bunker regulation that will go into effect in 2020. The group recently released a multi-client study that tackles the IMO regulatory change from every relevant angle, providing a detailed take on supply, demand and price changes that have to be expected in the wake of this sizeable spec switch. The main goal of the study was not only to provide insight into the supply options for bunker fuel with a 0.5% sulphur limit, but also to highlight the side effects this will have on other fuel markets and perhaps nearly equally important, how the world is going to deal with the large amounts of at least temporarily unused high sulphur fuel oil.
Industry Note No. 6 - Regulation Rollout
Over the next five-year period, the regulatory environment of marine transportation will adapt according to new environmental policies. Two monumental changes in maritime operations are fast approaching as the International Maritime Organization (IMO) implements policies to combat fleet emissions and the cross-contamination of invasive species across regions of the world. Download Industry Note No. 6 - Regulation Rollout to find out how the Global 0.5% Sulphur Emissions Cap and Ballast Water Management Convention will impact the tanker market.
Industry Note No. 5 - 2016 Spot Market: A Trend Down
Although overall tanker demand continued to grow in 2016, weakness took a hold of the markets as tonnage lists swelled on the back of an influx in newbuilding deliveries and a lack of tanker exits. Download this industry note to learn more about how the tanker spot market performed in 2016.
Industry Note No. 4 - LR Ton-Mile Demand Developments
In this industry note, we review recent ton-mile demand developments in the long range (LR) tanker sector with a focus on Middle Eastern exports and what we expect going forward as indicated in our 2017-2021 Tanker Market Outlook.
Industry Note No. 3 - VLCC Ton-Mile Demand Developments
In this industry note, we review recent DPP demand developments in the VLCC sector and what we expect going forward as indicated in our 2017-2021 Tanker Market Outlook.
Industry Note No. 2 - 2017 Tanker Market Outlook Scorecard
As a supplement to this year's 2017-2021 Tanker Market Outlook, we've developed an "Outlook Scorecard," which provides a snapshot of previous market behavior as well as 2017 forecasts. The one-page format makes it a perfect desk reference that can be used throughout the year.
Industry Note No. 1 - 2017-2021 Tanker Market Outlook
McQuilling Services recently released its 20th Anniversary Edition 2017-2021 Tanker Market Outlook. The 200-page report provides a five-year spot and time charter equivalent (TCE) forecast for eight vessel classes across 19 benchmark trades, plus two triangulated trades. Also included in the report is a robust, five-year asset price outlook as well as a one and three-year time charter forecast. This industry note provides an overview of findings from last year's Outlook as well as forward looking statements for 2017.