20 Aug 13 - 10:59
BIMCO report shows freight rates elevated in crude sectors
BIMCO has published the results of the report for the tanker shipping sector.The first half of 2013 has passed and there is a positive note as we enter into the second half of the year. Freight rates have been elevated in all crude sectors in recent weeks.
Apparently, too much tonnage leaves charterers spoiled for choice and owners anxious whenever the tonnage lists get too long. However, gravity has been defied recently, as earnings did not return to the devastating levels seen earlier in 2013 as forecast, but instead went close to USD 25,000 per day in the first part of July.
The market for crude oil tankers hasn't been particularly upbeat in the first half of the year. While a few pick-ups in earnings did arrive, the overall impression is one of discomfort. In the oil market as such, China stays the positive factor for now, unless it too begins to produce more crude domestically. Some signs of that have surfaced during the first half of the year. It remains a negative event for the crude oil tanker market if China, like the US, becomes more self-sufficient than is the case today.
All focus continues to be on product tankers, as the crude oil tanker segment is still experiencing some very tough times in the freight market. In short, product tanker supply growth is expected to see its lowest level of new deliveries in a decade, as BIMCO projects 4.3 million DWT to be delivered for the full year.
The product tanker orderbook now holds 38% more tonnage at 14.3 million DWT, comprising 229 ships, up from the January low at 10.4 million DWT. One hundred and thirty of these 229 ships are in the “hyped” MR segment, but LR2 product tankers are also in fashion, with 40 new ships ordered in the past 14 months.
In the meantime, the crude oil tanker segment is still bracing itself for the expected impact of 22.7 million DWT of new tonnage, offset by 10 million DWT of tonnage sold for demolition. This will see the fleet grow by 3.4%.
When will “normality” again prevail in the chartering market? The poor freight market has turned the charter rates upside down since the collapse back in 2009. In todays’ market, the longest-lasting time charters also reap the highest freight rate. This goes for all oil tanker segments. Whether rates have reached the bottom for crude oil tankers is unlikely, as illustrated by the falling Aframax t/c rates.
BIMCO expects that T/C equivalent average earnings for the VLCC segment will settle somewhat from recent highs in the interval of USD 7,500-17,500 per day. Suezmax crude oil carriers are seen up from recent lows at USD 10,000-20,000 per day. For the Aframax segment, expectations are that earnings will remain around USD 8,000-18,000 per day.
In the product segment, BIMCO expects earnings on benchmark routes for LR1 and LR2 from AG to Japan will pick up a bit after some weakness recently to hit the interval of USD 7,500-17,500 per day.
Handysize rates have seen significant volatility lately, but are expected to be more stable in coming months at USD 8,000-13,000 per day. MR clean rates hold up nicely nowadays and are expected to spend more time in the sun. For the coming two months, BIMCO expects freight rates around USD 9,000-14,000 per day.
