2020 Bunkers Regs to Drive Uptick in Product Tanker Demand: Gibson

Gibson says 2020 offers the potential for strong growth for the clean tanker market. Image: Navig8

E.A. Gibson Shipbrokers Ltd. (Gibson), in its most recent Weekly Tanker Market Report, said tightening environmental regulations on bunkers in 2020 could create a shift in the product tanker market, boosting the clean tanker segment in the process.

"Evidently from a clean tanker demand perspective, 2020 offers the potential for strong growth, whilst dirty product tankers face a more uncertain path. However, as we move into the next decade, the impact of new regulations is likely to push scrapping higher, particularly for older vessels which tend to trade more in the dirty products markets," stated Gibson.

"Furthermore, just as we see a demand shift in the barrel, we could also witness a higher proportion of the younger dirty fleet migrating into the clean tanker market."

Gibson notes that much will depend on the size of role scrubbers end up playing in shipowners' compliance methods, as well as how much of the expected excess of fuel oil can be consumed for other purposes.

The firm says that a figure of a 2 million barrels per day (bpd) increase has emerged as a consensus among many analysts for middle distillates as a result of the 2020 regs - a figure that could indicate possible tightness and perhaps even a short gasoil market at the time.

"Such tightness is likely to generate interregional imbalances and pricing differentials, generating arbitrage opportunities for traders, and with that, freight volatility in the product tanker market," said Gibson.

In March, Gibson said it is no surprise that shipowners have taken on a "wait and see approach" before deciding upon their compliance solution to meet the global 0.50 percent sulfur cap on bunkers set to come into force in 2020.