London tanker owner 'confident'

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Thursday, 19 March 2009

London-listed James Fisher says it is not unduly worried about the short-term performance of its tanker operations, despite sentiment that tanker markets are in for a big hit this year. The specialist in small product tankers said in its full year 2008 results that “UK demand for petrol and heating oil is the key driver for the Marine Oil division's services and this is likely to fall in line with GDP in a recession.”
The tanker owner and operator said however, that its fleet “enjoys a strong market position with contract of affreightment (COA) cover for most of its tonnage.”
“It is unlikely that a drop in demand in line with GDP would have seriously detrimental results,” it said.
“Marine Oil remains a steady, if slow growing, division with proven cash generating capabilities which has been most useful in recent years for investment in the company's other divisions,” it added.
The past few months have seen factors negative for tanker demand mount on the back of a deepening global recession.
OPEC supply cuts and record newbuilding entries have been blamed for making pressure on the sector more intense.
The latest report from the Energy Information Administration (EIA) of the US Department of Energyhas revised its global oil demand forecast downwards again.
The EIA’s projection for 2009 global oil consumption is now 3 million barrels per day (bpd) lower than it was in its September 2008 Outlook.
Aside from revising its demand forecast downwards, the EIA is also now more cautious about its estimates for recovery.
In terms of the physical tanker market, analysts have mostly been bearish, warning of significantly weaker demand relative to supply and slumping freight rates.
McQuilling Service's January 2009 Tanker Market Outlook said tonnage oversupply would 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.
That same report predicted that spot tanker markets "will be substantially weaker in 2009 than in 2008.”
In its latest report on March 12, the analysts at McQuilling reiterated their pessimism for the industry, saying that “the likelihood of increasing tanker demand in 2009 remains poor, in our opinion.”
Source: TankerWorld