Tanker market warning

Technorati Tags: Baltic Dry Index,Baltic Dry Indices,Ship Chartering,Shipchartering,Voyage Fixtures,Time Charter Fixtures,Panamax,Capesize,Handymax,Handysize,Supramax,Dry Cargo Fixtures,Bulk Cargo Fixtures,Baltic Exchange,Freight Review,Maritime Baltic Index,TNT Freight Review,LPG, LNG, Oil, Chemical, Shipbuilding, Tankers, VLCC, Overcapacity

Friday, 13 February 2009

Prospects for operators of oil, chemical, LPG and LNG tankers in 2009 looks increasingly bleak, as newly built ships continue to be delivered from shipyards at a time when market demand is diminishing and freight rates are tumbling accoroding to the latest Shipbuilding Market Report from Lloyd’s Register - Fairplay Research. “This research analysis confirms that the tanker sector, like the world shipping industry as a whole, faces a year of overcapacity, weak demand, falling production and low freight rates,” observed Niklas Bengtsson the firm's project manager and senior consultant“It won’t get better in the short term, since there are still a number of new ships from the ordering binge of recent years to be delivered from shipyards in 2009.” The report notes that, for most of 2008, tanker rates as a whole provided respectable returns for shipowners, but in November the spot crude oil markets began to feel the impact of the weaker trade environment. The supply and demand imbalance for very large crude carriers (VLCC) is worsened by the large number of newbuilds hitting the water. As of January 2009, the oil tanker fleet totaled 358 million deadweight tons (dwt). It has been growing at a rate of 4.8 percent annually, and there are a large number of ships currently under construction. While scrapping will remove some of the older tonnage from the market, the fleet will grow by 6.7 percent, measured in dwt, in the period 2008-2012. A balancing factor, according to the report, is the increasing number of VLCCs being chartered by Middle Eastern oil producers and traders for use as temporary storage, a move that industry experts say is helping lift spot charter rates. The prospect for chemical tankers is likewise bleak. The chemical tanker fleet has seen a tremendous surge in the last five years, growing at 10.3 percent annually. In January, the fleet amounted to 69 million dwt spread over a fleet of 4,402 ships. It will continue to grow as new ship deliveries outpace scrapping of older vessels. There may be some bright spots as opportunities arise in transportation of ethylene and biodiesel, but, in general, the demand for industrial chemicals in the manufacturing sector has collapsed. Cargo volumes are down by as much as 75 percent, while freight rates are down as much as 40 percent on some of the main trade routes. The same pattern holds for LPG and LNG ships. A total of 60 new LPG tankers will be delivered in 2009, while 23 older vessels are expected to be scrapped. Likewise, the LNG tanker fleet has grown by 15.3 percent yearly since 2004. Growth will slow to 12.5 percent over the next five years. Faced by the overcapacity in all sectors of the tanker market, newbuilding orders at Asian shipyards have slumped dramatically, with new orders for VLCC construction falling by as much as 75 percent in 2009, according to the forecast. Source: Maritime Global Net