"Unexpected carnage" in the third quarter has seen Clarksons Platou Securities to pull down its crude tanker estimates.
Analysts at the finance house took a red pen to their VLCC, suezmax and aframax numbers given rising fleet growth and a changing demand picture in the face of OPEC cuts.
“The next 12-18 months will be challenging for owners with fleet growth nearing 5% , while high oil inventories deter trade growth,” wrote analysts Herman Hildan and Frode Morkedal in the company’s latest quarterly report.
OPEC’s cut announced last week “increased downside risk” for the first half of next year, the analysts say.
They add production from countries outside the cartel will keep utilisation above levels seen between 2011 and 2013.
Rates view revised
Hildan and Morkedal are now charting VLCC rates of $30,000 per day in 2017, down from the $45,000 per day projected previously.
Their suezmax forecast for next year has come down from $32,000 to $23,000 per day and aframaxes are now projected to come in at $18,000 per day in 2017, some $10,000 down on the analysts’ earlier view.
“We retain a positive view on the prospects for a renewed upswing from 2018 onwards,” the pair wrote.
“We expect fleet growth to quickly slip back below trend as tight capital markets keep new orders low while scrapping should pick up. Relatively low oil prices should be positive for tonnage demand in the long term.”
The analysts’ 2018 VLCC rate forecast is unchanged at $40,000 per day, with suezmaxes marked down only slightly to $28,000 per day.
Seasonal cheer?
Crude tanker rates typically see a seasonal spike in the fourth quarter. While Hildan and Morkedal expect a seasonal upturn this year, they caution a repeat of the stellar end to 2014 and 2015 is unlikely this time around.
They explain the largest shift in the market during the past year has come from newbuilding arrivals, which have risen by 60% in the year to August. Fleet growth of 4% is the fastest seen since 2012, they add.
“Fleet development will continue to present a challenge to the market over the coming year, but arguably also could be the trigger for the next upswing down the line,” the analysts said.
“The surge in newbuilding orders placed in 2012 and 2013 has created a very large orderbook for this year and next.
“The 2016 orderbook is a massive 45 mdwt (all crude and clean tankers), which is one of the highest on record in absolute terms, although the size of the current fleet makes it a bit less daunting on a relative basis (9%).”
