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Product tankers set for substantial market growth

Product tankers set for substantial market growth
Product trades look set fair for development in the years to come. Interviews with leading product carrier owners in Denmark recently suggest that a 3% growth in product carrier trade over the next few years will fuel a substantial market growth.

Rates in the MR sector have been running at their best levels for four years albeit from a low base. Refinery cuts in Europe and Australia together with refinery increases in the US Gulf have been powering the market and with new refinery projects in the Middle East, India and China set to add export capacity and cuts in Japan all contributing to additional products movement.

Although there have been considerable orders for MR product carriers last year and this year, owners say that the orderbook as a whole across the handy/MR/LR1 sectors needs to be looked at because of the interchangeability between sectors. The handy sector has if anything been underinvested. As stem sizes have increased so the orders have tended to be for MR sizes, but ageing port infrastructure in Europe for example has meant that handy size tankers still have a role.

Nimble owners have been able to outperform market average earnings by skilfull deployment of their ships to minimise ballast voyages, which has always been the art of working the products market.

Dynamics of the market have been changing with US product exports the big story of the moment. Instead of being the biggest importer of products, the US is now exporting more than it is importing thanks to the shale oil story. It may be bad news for the crude trade but it is doing products no harm at all.

It is not only the sheer volume of products trade that is going up but tonne-miles also as refinery development shifts from the developed to the developing world.

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