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Tanker owners need to stop ordering newbuildings

Tanker owners need to stop ordering newbuildings
Crude tanker owners need to stop ordering newbuildings if they want markets to improve is the message of analyst Ralph Leszczynski of Banchero Costa.

Speaking at Mare Forum Hong Kong last week Leszcyznski, head of research for Banchero Costa, said that the current state of the tanker market was a “supply crisis”.

Despite all the talk of electric cars and alternative energy demand for crude oil and oil trade was actually at an all time high. “It was never really a demand issue, because despite all the doom and gloom you might hear…the reality is demand for oil has never been as high as it is now, trade in oil has never been as high as it is now,” he stated. The result is some 2bn tonnes of oil traded annually, almost as much as iron ore and coal combined. Changing trading patterns with China now the largest importer of oil after the US, and India the third largest importer of oil had also been beneficial to the shipping market.

The issue is though that when the market was performing well in 2014 and 2015 owners and financiers were not able to keep their wallets in their pockets ordering far more tonnage future demand required. “The problem is excessive fleet expansion like it is for other shipping sectors. The problem is we need to stop ordering,” Leszczynski said.

Despite the slippage in delivery dates and cancellations tanker newbuild deliveries were similar to 2012 at around 140 vessels totaling 30m dwt, and 2018 was looking “almost as bad”.

.”It’s difficult to imagine how we are going to absorb these in the next 12 months or so, so we have seen poorer markets. I really don’t see how things can significantly improve in the next 12 months,” he stated.

The only positives that would reduce further ordering would be the availability and pricing of finance, and the uncertainty over whether to fit newbuildings with scrubbers, dual fuel engines or wait a few years to see how the landscape developed on emissions reduction.

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