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2007 tanker tonnage oversupply a real threat

Article-2007 tanker tonnage oversupply a real threat

2007 tanker tonnage oversupply a real threat

Singapore: Analysts across the world are increasingly painting a grim outlook for the tanker sector next year based on large amounts of new tonnage coming onstream. The number of new tankers delivered next year will jump 20% to a 31-year high.
More than 32 million deadweight tonnes of new tanker tonnage is expected to be delivered into the market next year, said leading freight consultancy Clarkson Research, a 9 percent increase in the global fleet of 350 million deadweight tonnes. "The tanker market was heavily ordered since 2003, as there was a high demolition rate due to new International Maritime Organisation regulations on single-hulled tankers," said Martin Stopford, managing director at Clarkson Research.
Brokers anticipate just 8 million tonnes will be removed from service next year, with many of the industry's oldest tankers sold for scrap between 2000 and 2003, when an estimated 90 million deadweight tonnes were scrapped.
"We are pessimistic about the outlook for 2007, as we do not see demand being able to absorb the new supply coming into the market, especially since economic growth is likely to be stable in 2007,"  a senior analyst with the UBS global transport analyst team told Reuters.
Citigroup is similarly concerned by the forthcoming tanker deliveries. "Although the delivery schedule is stretched over a period of almost four years, the order book should be the major concern for every shipowner, and there is nothing that points to a slowdown in ordering," Citigroup Investment Research told Reuters.
The International Energy Agency forecasts an average global demand rise of 1.8 million barrels per day (bpd), or 2.0 percent a year, to reach 93.7 million bpd in 2011.

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