Tankers Archive

May 5th 2017

Newbuilding deliveries Build month as it stands today

We promised on outlook for CPP trades last week. Over the past 5 days we have added to our supply / demand model forecasts for trade in mixed aromatics, light cycle oil and VGO. We have added an estimate for the future volume of inter-regional CPP flows that can only be identified by tracking AIS vessel movements. We have calculated the distance these flows move to generate our estimate of dwt demand. We have compared this to our estimate of future supply, both with and without future orders. What we have not done – the curse of weekly report deadlines – is rigorously checked our numbers. As such we are not comfortable publishing our results today. Instead we will show you one key element of that study – how the existing orderbook looks by delivery month.

April 13th 2017

China’s consumption tax proposal Implications for product tankers

Tax authorities in China may impose a consumption tax on the use of mixed aromatics and light cycle oil. The tax-exempt status of these refinery by-products has been a key reason behind the growth in their imports, which last year were 65% higher than all of China’s other clean product imports put together. If imposed, a tax could reduce China’s imports of these products and hurt product tanker demand and earnings.

April 7th 2017

Shipping market cycles Timing and magnitude

A popular chart these days draws a dot for each shipping sector at some point along a curved line representing the peaks and trough of a hypothetical shipping cycle. Some sectors will be on the way down this visual ‘wave’, or at its nadir; others will be on the way back up, or at its peak. In its simplicity alone it is a thing of beauty. Unfortunately it is unlikely to be more than a reflection of a sector’s recent performance relative to historical average and it says nothing about the length or magnitude of each sector’s shipping cycle. But is there a way of saying something that might actually be useful to a sector-agnostic investor without complicating the picture?

March 24th 2017

Supply growth The key to recovery

Despite continuing weakness (and in some cases deterioration) in spot earnings over the past three months we see little reason to downgrade our 5 yr outlook for Suezmaxes and VLCCs. But under growing pressure from Suezmaxes and clean-trading LR2s, our outlook for Aframaxes has taken a near term hit. For product carriers, the recent jump in MR rates in the West has not changed our assertion that problems will continue to mount for the sector until stocks revert to longer-term averages. Rising European diesel production and competition from propane and ethane as a feedstock for steam crackers will create problems beyond spring refinery
turnaround. While we see steady recovery from a low point this year, that low point has become lower.