Tank prices are now up to five times higher than last year
Not only container freight but tanker shipping is also fully enjoying a price boom. At the end of May, the average spot market revenue for an MR (Medium Range) pure cargo ship was approximately $ 36,000 per. day. This has quintupled them, last year it was still at a historically low level at an average of $ 67,000.
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As a result, the product tanker market strengthened significantly in April and May, with market rates at much higher levels than for both the first quarter of 2022 and the full year of 2021, the tanker company Concordia Maritime said in a market update based on Clarkson’s figures. .
The time charter market has also been strengthened, and a three-year contract for an MR tanker is currently at $ 15,000 to $ 18,000 a day, depending on the ship’s design. For a Suezmax vessel, the average earnings are around $ 22,000 per. day. Segment volatility was high in April and May, with occasional increases reaching levels above $ 60,000 per share. day. Last year, the average income was still at $ 7,300 a day.
Only the VLCC segment (extra large oil tankers) is still at a historically very low level, mainly due to the high oil price. VLCC ships are often used as floating storage tankers in anticipation of higher oil prices. That is not the case now. “This imposes an indirect ‘ceiling’ on Suezmax ships, as charterers will combine two cargoes on a larger ship if the rates in the Suezmax segment become too high,” Concordia expects.
The stronger product tank segment is due not only to a continued strong demand for oil, but also to changing trade patterns, as Russian oil products are being phased out in certain markets due to sanctions. This is especially true of European diesel imports, which are now increasingly coming from the Middle East, Asia and North America. Overall, the phasing out of Russian oil has resulted in longer transport distances and greater transport efficiency.
The impact of refinery closures in North America, Europe and elsewhere is also now beginning to be felt, Concordia Maritime notes. “The fact that total refining capacity has decreased west of Suez but increased in Asia and the Middle East means longer transport distances, affecting the entire tanker market.”
“It should be noted that the average income is just an average,” the tanker company takes reservations. “For both the MR and Suezmax segments, revenues vary widely depending on vessel type and geographic trade.”
Clean and dirty products
For example, freight rates in the Atlantic were generally higher than in Asia. In addition, clean products gave a higher yield than dirty ones. The market is primarily affected by rising oil prices. Since the beginning of March 2022, the price of Brent oil has been above $ 100 per barrel. barrel – and is currently around $ 120 per barrel. barrel.
“It is very likely that geopolitical instability will continue to affect the oil and tanker markets in the future,” Concordia Maritime said. “Since the invasion of Ukraine, both the oil and tanker markets have been gradually trying to adapt to the new situation, and we have not yet seen the end result of this, as sanctions continue to be imposed and trade routes change. But increased European imports from more distant producers are likely to continue. ‘
Meanwhile, according to the International Energy Agency (IEA), global oil demand is expected to grow by 3.6 million barrels per day between April and August 2022. The main factors are the easing of restrictions in China and an ongoing recovery in aviation fuel demand.
Overall, this promotes a continued ‘cautiously optimistic’ view of the development of the product tanker market for the remainder of the second quarter and the remainder of 2022.
Not only oil tankers, the LNG tanker market is also experiencing a ‘high season’. Gas traders around the world are having great difficulty finding available tankers to ship liquefied natural gas (LNG).
According to the owners of the ships, companies such as Shell, French TotalEnergies and Unipec from China are already working hard to reserve ship capacity for the coming winter season in order to be able to transport the cooled fuel. It also leads to higher prices, writes the British business newspaper Financial Times. Due to the sanctions against Russia for the invasion of Ukraine, European countries in particular are looking for alternatives to Russian gas.
According to researchers at investment bank Clarkson’s Platou Securities, prices for chartering an LNG tanker for one year are rising to the highest level in ten years, at $ 120,000 a day. That’s more than 50 percent more than a year earlier. The boom is primarily due to the EU’s promise to reduce its dependence on Russian gas by two thirds before the end of the year. Tens of billions of cubic meters of LNG are to be imported as compensation.
According to the shipowners, TotalEnergies is mainly active in looking for tank capacity for rent for a period of three to five years. It’s longer than usual. TotalEnergies told the newspaper not to comment on rumors in the market.
The buzz on LNG ships is also coming at a time when new global emissions regulations for shipping are on the way. This can further reduce supply. East Asian shipyards are also struggling to get new LNG tankers up and running quickly enough.
According to experts, the demand for modern LNG tankers is also increasing due to the expensive cargo. Older ships fall into disfavor because they use turbine engines powered by the steam from LNG. With that, they are actually using their charge to get ahead.