Long Range Tanker Market on Upswing Says Gibson

by Ship & Bunker News Team
Friday November 14, 2014

Shipbrokers EA Gibson (Gibson) said Friday in its Weekly Tanker Report that there has been a dramatic upswing in long range tanker charter rates.

Time Charter Equivalent (TCE) spot rates for long range tankers hit $34,000 per day for LR2 units and $25,500 per day for LR1s.

Rates for the same units edged only slightly above $11,000 per day during the first half of 2014.

"For quite some time, we have been forecasting significant increases in long haul product tanker demand on the back of expanding refining capacity in the Middle East," said Gibson.

Gibson added that the Jubail refinery in Saudi Arabia had come on line, increasing demand for long range tankers, and three more in the region were set to do so between now and 2016.

Stronger demand, particularly for LR1s, has also emerged in the Western Hemisphere.

"The biggest development over the past couple of years has been a dramatic increase in LR1 shipments from the UK Continent to West Africa: this trade has grown from virtually nothing a few years ago to regular two/three 60,000 tonne [Clean Petroleum Product] cpp cargoes every week," said Gibson.

In addition, the report said there is potential for further U.S. tanker demand as long as U.S. refinery margins remain strong.

Scorpio Tankers Inc. recently reported a third quarter loss to the market while it added 12 tankers to its fleet.

Ship & Bunker News Team
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