Product Tanker Players Bullish for 2019 as Market Readies for IMO2020

2020 looking good for tankers. File Image / Pixabay

Having endured tough conditions of late, product tanker players are starting to see the market improve and, as the industry readies itself for IMO 2020, are getting bullish on the prospects for 2019.

"We may well have seen the darkest side before a dawn," Robert Bugbee, President at Scorpio Tankers said Tuesday during the firm's latest earnings call, as quoted by Seeking Alpha, adding that "there is no industry better than the product market that will gain in terms of demand from 2020."

As has already been extensively discussed in these pages, when the upcoming global 0.50% sulfur cap on marine fuel comes into force from January 1, 2020, the vast majority of vessels are on course to switch away from HFO and will comply by instead burning MGO and VLSFO blends.

But shipowner/operators will want to switch over to the new fuels at some point next year, and "if you do it much later than Q3 you're going to run into problems as there's no grace or transition period," Svend Stenberg Mølholt, Group COO, Monjasa, told Ship & Bunker recently.

The result should be an uptick in fuel logistics activity well ahead of IMO 2020: "We see that you have to move cargo around even prior to that position in the '19 position," said Bugbee.

Ardmore Shipping CEO, Anthony Gurnee, echoed the sentiment.

"We expect the changing regulations for bunker fuels which take effect from January 1, 2020 to result in a significant increase in seaborne volumes of refined products from mid-2019, providing a further boost to tonne mile demand," he said in comments made alongside the release of his company's latest financial results.

"On the supply side, ongoing scrapping and the record-low orderbook for MRs should result in net fleet growth of less than 1% in 2018 and 2019. This pairing of strong tonne mile demand growth and very limited supply growth creates the conditions for a rebound in charter rates."