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Danish shipping companies upbeat on product tanker market in 2023

Hafnia, Torm and Maersk Tankers in Singapore
Danish shipping companies Torm, Hafnia and Maersk Tankers are bullish about the outlook for product tanker markets in the coming year with positive supply and demand factors.

While rates have come down from the highs seen a few months ago senior executives from the three companies speaking at briefing held by Danish Shipping in Singapore remained confident about 2023, with the possibility of strong upswings remaining.

Kristian Jasper, Global Head of Chartering and Managing Director for Maersk Tankers in Sinagpore, said that the market had been relatively strong over the last year, but had come off recently. He noted that there was great volatility in oil markets and that as a result there was still great volatility in arbitrage between different locations, which in turn drives increased demand for transportation.

On the demand side Jasper sees increased demand post Covid, highlighting jet fuel demand in China, while the supply of ships remained constrained. “We believe that the tanker markets will remain solid,” he said.

Frank Yap, Vice President Chartering and Head of Torm Singapore, commented: “I think the oil market is at a crossroads, obviously the conflict in Ukraine has shaken up some of the trade routes. and I think the key to watch going forward is the further development in Ukraine and the opening up of China.”

On the supply side he noted the orderbook for tankers was at a historical low and shipyards were largely full up for newbuilding up to 2026.

The situation with sanctions on Russia has significantly increased tonne mile demand for both crude and product flows as Russia exporters seek different markets to sell to, and European countries find new sources of supply.

Asked by Seatrade Maritime News to quantify the impact of the tonne-mile increases on ship demand, Peter Kolding, Vice President, Commercial and Pool Management for Hafnia, said it was an equivalent of well above an additional 100 MR tankers. The company estimated an equivalent of 90 MR tankers for Russian exports, while a similar additional number was required for replacement imports into European countries.

Torm’s Yap put forward a potential scenario where demand and supply factors, as well as the tonne mile equation, could result in fleet utilisation rates in the range 89 – 90% which could dramatically push up rates as was seen last year.

Hafnia’s Kolding commented that a very small change in utilisation numbers could have a very large impact on rates. He said that in a fairly tight market where utlisation rates were already in the mid-80’s percentages a 2% uptick in utilisation could be the difference between rates of $30,000 per day and $50,000 - $70,000 per day. “It’s very finely balanced,” he said.