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Product tanker orderbook 'getting out of hand'Product tanker orderbook 'getting out of hand'

Enthusiasm for the product carrier market is starting to be tempered by the growing orderbook in the sector.

Ian Middleton, Former Tanker Correspondent

March 20, 2014

1 Min Read
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Broker Banchero Costa concludes in its latest report that “the attention the sector is attracting is now getting out of hand, with a real risk of undermining medium-term prospects."

Market fundamentals have been improving and this is slowly being reflected in charter rates and ship values the Italian broker says. However, the wave of product carrier newbuildings that this situation has attracted, threatens to derail the positive products story.

Global trade in clean and dirty products has grown by an average of 5% a year over the last ten years according to BP figures going from 490m tonnes in 2003 to 801m tonnes in 2012. This despite a significant slowdown from the traditionally biggest importer of products, the US, which became a net products exporter in 2011 on the back of the shale revolution, and weaker demand in Europe. However, surging demand in Asian markets has more than made up for that.

Naturally that growth story has not gone unnoticed by the world's tanker owners. Last year, says Banchero Costa, more than 19m dwt of product carriers have been ordered - more than three times the 5.9m dwt ordered in 2012. Furthermore, 12.8m dwt were MRs. In the first two months of this year at least 24 more MRs were added to the orderbook.

The picture still remains positive thinks the broker because deliveries this year and next are still nowhere near the levels seen 2007-2010, but at the current ordering rate “we might well soon get there”. A fleet expansion for MRs is expected to be 9% in 2015. “Therefore more restraint would be strongly advisable, so as not to kill the recovery when it's only just starting,” concludes Banchero Costa.

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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