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Thursday, December 14, 2017

Tanker market may be approaching a supply surplus

INTERTANKO has looked at the developments in deliveries, removals and phase-out, and the indications are that the tanker market may be heading for a surplus of tonnage.

 

In this case we have assumed that all single-hull tankers (except double sided and double bottomed vessels) are removed by the end of 2010 - this may not be totally realistic as some will continue to trade depending on their flag and their trade. We have assumed the trade increase to be 4.5% as from 2007. There have also been some removals of tankers in addition to the required phase-out:  we have assumed 1.8 m dwt sales for conversion 2007-2010. These may be regarded as premature sales for decommissioning. Over the next three years we have also deducted some 1.6 m dwt of tankers that should have been phased out before 2010. We have also assumed that the market is balanced at the end of 2006. The latest figures from the Clarkson Shipyard Monitor show that  deliveries in 2009 will be more than 46 m dwt, leading to a build-up of tonnage prior to the theoretical tonnage phase-out in 2010.

 

According to these assumptions, 15 m dwt, in addition to the 21 m dwt already on order, will have to be ordered to balance the market by end 2010. Thereafter the newbuilding demand could drop to roughly 20 m dwt per year.

 

If trade increases annually by 5.5% rather than 4.5%, another 15m dwt (or a total of 30m dwt over and above today's order book) has to be ordered for delivery in 2010 to balance the market.

 

If trade increases annually by only 3.5% rather than 4.5%, then no additional orders are necessary for delivery in 2010 to balance the market.

 

It is important to note that the charterers' preference for double-hull (DH) tankers causes an inefficient use of single-hull (SH) tankers. The assumed balance end 2006 therefore hides an 'inefficiency' surplus of tonnage.

 

Contact: Erik Ranheim