Analysts reiterates their pessimism for the tanker markets for the next few years, warning of significantly weaker demand relative to supply and slumping freight rates.
Analysts at McQuilling Services have reiterated their pessimism for the tanker markets for the next few years, warning of significantly weaker demand relative to supply and slumping freight rates.
McQuilling's January 2009 Tanker Market Outlook pegged tonnage oversupply to develop during the 2009-2013 period ?as a result of several years of unbridled new vessel ordering and a collapse of tanker transportation demand.?
?Demand has evaporated due to the international economic upheaval that fully manifested itself during the second half of 2008,? said the report.
The global economic slowdown is forecast to significantly press down tonnage demand over the 2009-2013 period as ?energy consumption stalls in developed economies and moderates in emerging economies.?
The primary conclusion of McQuilling's latest Tanker Market Outlook is ?that spot tanker markets will be substantially weaker in 2009 than in 2008.?
McQuilling also expects continued weakening through the forecast period of 2009-2013 as ?tonnage oversupply continues through this time-frame.?
TCE earnings in 2009 have also been pegged to be substantially below 2008 levels, but they ?should still exceed the 10-year historical average (1998-2007) in each vessel sector,? said McQuilling.
?By 2013 however, we expect TCE revenues to fall below this average as rates generally decline throughout the forecast period,? it added.
The analysts at McQuilling have, prior to this latest Outlook, already sounded warnings about the near future of the tanker market in at least two previous reports in January.
In the earlier one, with regards to tonnage availability, McQuilling said that the ?2009 supply picture looks quite disturbing...?
Without counting newbuilding delays in 2008 that will roll-over to 2009, the expected fleet additions are nine times the number of fleet exits, according to that report.
The second report repeated the prediction that ?the supply picture will have a negative effect on the freight market in 2009...?
?It seems that the last variable with any wiggle room is bunker prices, which will have to average significantly lower in 2009 to generate TCE revenues anywhere near last year's levels,? it added.