In its latest
Tanker Opinion, Poten & Partners Inc. (Poten & Partners) says that
while tanker owners are currently "doing well" and will enjoy a
strong market throughout 2016 as high crude production continues to require
transportation, "after this year, we foresee weakening freight rates as
deliveries increasingly affect tonnage supply and oil inventories start to wind
down."
When that
inevitable market decline comes, Poten & Partners argues that scrapping
alone will not be enough to keep the market in balance.
While the global
tanker orderbook is not excessively large in historical terms, the partners say
it will still require a sizeable demand increase to maintain a balanced market
in the coming years.
However, due to the
2004-2008 commodity boom, the fleet is fairly modern: of the current VLCC fleet
of 653 vessels and 128 on order, 26 are about to turn 20 years old and could be
scrapping candidates.
Scrapping
candidates for the 594 crude tanker Aframax fleet (with an orderbook of 92
vessels) is 45 in number, and the 426-tanker Suezmax fleet (with 129 new
vessels on order) has 21 scrapping candidates.
Even though many of
these vessels will need to undergo a special survey within the next few years
(which often compels owners, faced with spending millions of dollars in
upgrades, to choose demolition as an option), Poten & Partners believe a
relatively small number of vessels will be sent to the scrap yard.
"Based on the
profile of the fleet, it does not look like there are enough scrapping
candidates to offset the deliveries and quickly support the [weakening freight]
rates," Poten & Partners concludes.
Last September,
Poten & Partners predicted that tanker fleet expansion will "pick up a
bit in 2016."
Source: ship
and bunker. 21 January 2016
http://shipandbunker.com/news/world/547454-tanker-sector-cant-rely-on-scrapping-to-keep-market-balanced
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