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Confidence growing among large tanker ownersConfidence growing among large tanker owners

Owners of large tankers may still have been losing money as second quarter results of listed companies seem to show, but confidence in the sector appears to be growing. Increased earnings in the second quarter and further increases at the start of the third quarter underpin the better news story.

Ian Middleton, Former Tanker Correspondent

August 15, 2014

1 Min Read
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While VLCC earnings have yet to see the benefit, hovering just above $20,000 a day, suezmax and aframax spot market earnings in the third quarter to date are at their highest for Q3 since 2008.

Teekay Tankers ceo, Kevin McKay, in the company's recent second quarter earnings release said: “While we expect rates to soften from the current high levels, we believe that stronger oil demand, limited tanker fleet growth and improving global economic conditions will continue to support a general firming of average spot tanker rates.”

The company is backing its forecast with action, chartering in ships and reducing the fixed rate coverage of its fleet. Fixed rate coverage for the next year is down to 26% from almost 50% a couple of years ago thereby giving the company much greater spot exposure.

VLCC and suezmax powerhouse, Euronav, seems to share the view saying crude tanker rates should remain strong in the coming months due to positive seasonal demand factors and improving underlying supply/demand fundamentals.

It too has backed its confidence with action this year acquiring 15 VLCCs from Maersk and an additional four VLCCs.

Charterers seem to be taking a similar view. One-year time charter rates for a modern VLCC are up to almost $30,000 a day, according to Clarkson Research estimates against an average for last year of under $20,000 a day. Figures for suezmaxes and aframaxes have risen commensurately. Although these estimates are based on only a handful of fixtures in each sector, they are surely indicative.

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About the Author

Ian Middleton

Former Tanker Correspondent

Ian Middleton is former editor of Tanker Trends, and before that of both Seatrade magazine and Seatrade Week. After having begun his career with a leading UK newspaper chain, Ian joined Seatrade in the late 1970s, allowing him a ringside view of the up's and down's of the shipping business from the 1980s slump onwards.

With his specialist knowledge of the tanker market, Ian is one of Seatrade's most experienced writers and a practised conference speaker and moderator.

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