2013 to be "Another Challenging Year" For Tankers

Demand for tankers was high in the first half of 2012 but then fell sharply

Teekay Marine Markets predicts some increases in crude tanker demand this winter but doesn't expect a strong market recovery until 2014, analyst Christian Waldegrave said Monday in the company's latest tanker market update.

Waldegrave said the market during the first half of 2012 was "pretty decent," with significant imports, particularly in China, and particularly for stockpiling purposes, and with strong demand for very large crude carriers (VLCCs) and Suezmaxes.

"During the summer months and into the second half of the year, a lot of that changed and we saw quite a significant downturn in crude tanker demand," he said.

"In fact tanker fleet utilisation probably lost about 5 percentage points between Q2 and Q3."

Waldegrave said contributing factors included a dip in the Chinese economy, which reduced crude demand from 5.6 million barrels per day (mbpd) in the first half of the year to 4.4 mbpd in August, and increased use of oil to power cooling systems in the Middle East, which reduced the oil available for export.

Based on trends in previous years, Waldegrave said the market will likely pick up a bit in December, and he said growth in tanker demand is likely to be a modest 3 to 4 percent in 2013.

"I think it's the same message that we've been seeing for a while now in that it's going to be another challenging year," he said.

Waldegrave said the market should see some improvement in 2014 when current reductions in ship orders begin to make themselves felt.

"Fleet growth will drop off," he said.

"That's when we'll start to see a sustained recovery in rates."

Andreas Sohmen-Pao, CEO of tanker operator BW Maritime, recently warned that the industry should be cautious about ordering new ships with the current glut of vessels in the market.