Clarksons Platou Securities’ shipping team is signing off for July with a bold prediction of further increases in tanker rates.
Analysts Frode Morkedal and Even Kolsgaard said VLCC earnings will “rise like a phoenix” as demand increases and the fleet works at full tilt.
“We don’t see any hidden fleet capacity in the tanker sector to spoil the party,” they added.
Non-eco VLCCs were averaging only $5,000 per day in the first half of 2022.
But eco and scrubber premiums increased the worldwide fleet figure to $12,000, the investment bank said.
For the third quarter, Clarksons Platou is predicting a rise to $25,000 per day, followed by a further increase to $42,000 per day in the final three months.
And it gets even better in future years.
Clarksons Platou forecasts $47,000 per day next year and $61,000 per day in 2024.
“As a result of a record-low orderbook and slow steaming due to new carbon limits, crude tanker fleet growth is stagnating and going negative in real terms,” it said.
Product tankers ‘exceptional’
In contrast, product tankers had an exceptional first half of 2022.
In the first three months, the average daily rate was $12,000 for a 10-year-old MR vessel without a scrubber.
This has now reached $50,000 per day.
Product tonne-miles have increased dramatically as Europe transitions away from Russian oil, and could hit 14% growth by the end of the year, Morkedal and Kolsgaard said.
This process is not complete because the official restriction on Russian oil imports does not take effect until the end of 2022, they said.
“Repositioning … and speeding up may lead to somewhat lower rates, although weather delays and the continuous trade shift may offset this by late 2022.”
Clarkson Platou predicts average MR earnings of $20,000 per day in 2023 and $23,000 per day in 2024.
It believes tankers will have a better risk/reward ratio than bulkers due to a reduced shadow fleet overhang and the fact that the vessels in general could be more resilient in a recession because of storage build-ups.
Shipping continues to outperform
During the opening six months of this year, the average shipping stock gained 20%, outperforming the S&P 500 index, which fell 19%.
Shipbrokers have continued to raise ship valuations for tankers across all crude and product carriers.
Investors appear unwilling to price in the ongoing rate rise, instead assuming a return to historical norms, Clarksons Platou argues.
Product carrier player Scorpio Tankers has been the best-performing shipping stock this year, with a 169% increase.
Analysts’ average profit forecast for the third quarter is only $1.09 per share, compared with $2.88 expected for the second half in total, even though spot rates have started substantially higher.
Clarksons Platou is predicting earnings per share of $4.24 for the third quarter.
“We believe the forthcoming reporting season could be a turning point because of the impact that companies’ guided bookings will have on the need for earnings upgrades,” the analysts said.
“And because of the product tanker sector’s outstanding cash inflows, a sizeable portion of that cash could be returned to shareholders.”