IEA: Asian oil demand supports the global tanker market

According to chemical network news on December 16th: The International Energy Information Agency (IEA) stated in its monthly report that the global tanker market may benefit slightly from the recovery of oil demand in Asia in the coming months, although rising fuel oil prices may Limit the upside of charterers.

Market sources said that more tankers may enter the east of Suez in the coming weeks, and overcapacity may limit the upside of crude oil tankers. From October to November, the number of ton-miles transported by tankers per day increased by 4%, but it still fell by nearly 11% compared to November last year.

The demand for ton-miles of crude oil tankers increased last month, partly due to strong purchases from Asia.

Asian refiners have been purchasing large quantities of crude oil from the Middle East, West Africa and Europe, which has helped to reduce some of the spot tonnage.

Despite the improvement of the situation, the demand in most tanker markets is still quite sluggish. The increase in tanker activity, coupled with rising fuel oil prices with the rise in crude oil prices, only provided weak support for tanker freight rates in November and early December.

A shipbroker said: "Demand in Asia has picked up, but European purchases are far behind."

Data shows that from August to December 2015, VLCC freight rates on West Africa to East Africa routes increased by an average of 66% per year. As of December 14, 2020, cargo on this route has dropped by 6.6% compared to August 1.

Since 2013, the proportion of super-large tankers over 16 years old has doubled from 10.3% to 21.5%. As a result, there are currently 179 super-large tankers in service for more than 16 years, which cannot meet the requirements set by most charterers in the spot market.

The current order volume in 2021 is also the lowest in 10 years, reflecting the growing concern about the transformation of renewable energy, as well as the uncertainty of future supervision and technology to meet new standards.

The production capacity of the tanker fleet is expected to increase by 2.7% in 2021, which is lower than the growth rate of 6.1% in 2019.

Product tankers are supported by demand for light products in Asia, while South Africa has a shortage of refining capacity.

Persian Gulf-Japan medium-range oil tanker freight increased from w96 on March 12 to w115 on December 15, with a base of 35,000 tons. In the same period, the freight rate of long-range tankers on the same route (base of 55,000 tons) has jumped from w75 to w120.

This is due to the recovery of the backhaul freight market from the Asia-Pacific region to Southeast Asia, which has led to a longer delivery time for repositioning in the Persian Gulf.

The return of naphtha pyrolysis oil in the Asia-Pacific region has supported the market.

In addition, the IEA stated that the temporary closure of the Engen refinery in South Africa opened the window for arbitrage of shipments from the Persian Gulf to the basin, thereby enhancing the availability of the process.

Due to the unfavorable futures contract structure in the market, the floating storage inquiry for LRs slowed down in December, and the slowdown in the American goods inquiry also slowed the traditional trade flow in the Atlantic Basin.