Clean tanker owners should be on the lookout for a surge in oil product flows, according to Clarksons Platou Securities.
Rates in the sector fell a little last week, with modern LR2s now earning around $60,000 per day, down $10,000.
But overall earnings remain strong, with brokers noting that fleet supply has stayed tight due to longer voyage distances.
“Slower activity can have an immediate impact on rate levels when the market balance is relatively tight, as it is now, but should be expected to rebound quickly once activity improves,” Clarksons Platou analysts Frode Morkedal and Even Kolsgaard said.
When capacity utilisation increases, freight rate volatility becomes the norm, they explained.
Refined product margins fell significantly last week but remain buoyant. Margins are lower because refiners are producing more, so no negative impact for product tankers should be read into lower refinery margins, the investment bank believes.
“In fact, the fundamentals for product tankers appear to be very strong,” the analysts said.
According to the International Energy Agency, global oil demand is expected to rise by 3.6m barrels per day (bpd) from an April low through to August as Chinese Covid restrictions ease, summer driving picks up and jet fuel continues to recover.
This is expected to raise global refining activity significantly, Clarksons Platou added.
Between now and August, runs are expected to move upwards by 4.7m bpd.
6% volume jump?
The analysts calculated that in the past, 28% to 29% of global refining volumes have been seaborne.
This could mean a 1.3m bpd hike in shipments, representing a 6% increase for product tankers.
“In short, we argue that product tankers have been backed by miles in the tonne-miles equation, but tonnes will now expand as well,” Morkedal and Kolsgaard concluded.
UK shipbroker Howe Robinson Partners said sentiment among MR tanker owners is still firm for trips from Europe to the US.
But the cargo list is almost completely empty.
Pressure on in the Atlantic
With a couple of vessels waiting for work in northern Europe, “momentum could stall, and rates come under pressure unless we see more enquiry”, the London shop added.
Cross-Mediterranean numbers continued to climb, hitting Worldscale 365, however.
Tonnage availability is said to be “limited”, with cargoes in good supply.
Handysize and MR ships are battling for the business, Howe Robinson said.