While for the most part, 2008 can be hailed as one of the best year for the tanker shipping market, the effects of the global economic crisis managed to restrict the positives by the end of the year.
While for the most part, 2008 can be hailed as one of the best year for the tanker shipping market, the effects of the global economic crisis managed to restrict the positives by the end of the year. The international credit paralysis took its toll in the tanker market as well, by freezing sale and purchase activity, dropping asset prices by at least 20 percent and leading spot rates downwards, mainly as a result of OPEC"s cutbacks in production levels, which ended in fewer number of barrels to be transported by sea. These are included in the latest Tanker Market Outlook: 2009 ? 2013, compiled by Mcquilling Services, a US-based Marine Transportation Advisors company. The report says ?the next five years in the oil markets paints a picture of lackluster crude oil demand growth over this period. The average annual growth from 2009 through 2015 is projected to be a slim 1.5% per year. Demand in 2009 is expected to measure a meager 200,000 per day over 2008 levels?. This means that the tanker market is set for a correction, but investment opportunities in various ship types will emerge. According to Mcquilling, ?tanker demand projections yield effectively no ton-mile growth for crude and dirty products in 2009 over 2008. For VLCCs we see a tiny 0.1% ton-mile increase while the Suezmax contracts slightly by 0.2%. We forecast Aframax growth at 0.2% and a contraction for Panamax tankers of 0.4% on a ton-mile basis?.
But, if one factors in the variable of lower bunker costs, then the projected reduction in spot rate levels on TCE revenues in 2009, should still remain above the 10-year average (1998-2007) in each vessel sector. Mcquilling places the average bunker price at about $275 per metric ton in 2009, taking as an assumption that crude prices will average approximately $55 per barrel in 2009. However, by 2013 TCE revenues are expected to fall below this average as rates generally decline throughout the forecast period. The reason for this is attributed mainly in the international economic climate which will have a negative impact during 2009, as well as tonnage oversupply expected to influence the market for the next years until 2013.
The US company counts a total of 1,372 tankers on order from 2009 through 2013. Tanker deliveries scheduled in 2009 are 34% greater than those in 2008, while deliveries in 2008 were already 36% greater than the average for the previous sseven years. Also, the fact that these orders have been placed in established yards, Mcquilling states that the majority of the vessels will be delivered sometime during 2009. Similarly, the company estimates that 116 tankers will exit the fleet, with over half of these coming from the MR sector. The number will be reduced at 130 vessels in 2010, as the majority of the single-hull tonnage will be leaving the market. On average Mcquilling expects about 75 vessels exiting the fleet annually between now and 2015.
Amid this market environment, the company sees opportunities for industry consolidation and fleet expansion that will rise during 2009 as the less experienced, committed and able, exit the sector. ?A key feature will be securing either traditional or alternative forms of ship financing to fund the existing orderbook and opportunities as they present themselves? said the report.