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No relief yet for tanker owners as rates stay down

Photo: Euronav Tanker Ann Euronav
Euronav VLCC Anne on sea trials
As some other shipping sectors enjoy a spell of super-profits, tanker owners continue to endure months of miserable rates and accumulating losses.

However, in market analysis released last week by Belgian-based tanker owner, Euronav, the company identified some potentially positive factors in the months ahead.

Asset prices are firmer, Euronav noted, with VLCC and Suezmax prices climbing 9% in the second quarter alone. Steel prices hit their highest level since August 2008, one factor in pushing recycling rates to more than $600/ldt in Bangladesh, for example, and more tankers heading for demolition. Nine VLCCs have been sold for recycling so far this year, the company said, more than double the 2020 total.

More “phase-out candidates” continue to accumulate, meanwhile, with 9% of the VLCC fleet now more than 20 years old. As emission regulations tighten and new carbon-reducing measures enter force, further disposals are likely in the months ahead.

Euronav noted that onshore oil inventories are returning to the five-year, pre-Covid average. This is an important factor in driving tanker demand thorough more normal imports and exports of crude. Euronav noted a sustained increase in Middle East export cargoes over the second quarter, with June’s figure the highest since December last year, steadily drawing down tanker supply in the region.

Other likely positives include the phased increases in OPEC+ production between now and the year-end which is likely to mean an extra two million barrels of oil supply a day by then. This could create demand for up to 60 VLCCs. Meanwhile, crude oil demand is likely to rise over the balance of the year as more economies emerge from Covid-19 restrictions.

The Euronav analysis came as the company unveiled a thumping $90m loss over the second quarter, taking its losses over the first half of the year to $162m. This compares with a profit of more than $486m in first-half 2020.

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