Tankers are being backed to benefit the most from a resurgence in global trade and confidence after drugs company Pfizer announced it had a working Covid-19 vaccine ready to go.
The news on Monday sent stocks shooting up worldwide, and shipping companies were no different.
Norwegian investment bank Fearnley Securities said cruise lines rallied between 20% and 30%, and product tanker owners by between 10% and 15% on Monday.
"Whilst clearly too early to conclude on how quickly the world will normalise and how the post-Covid world will look, the vaccine — if successful — is no doubt a positive for shipping," Fearnley said.
Compatriot investment bank Clarksons Platou Securities — a unit of shipbroking giant Clarksons — said there was likely to be "a particular boost" for tankers as oil prices rise and jet-fuel demand increases.
Boxships less busy?
But analysts Frode Morkedal and Omar Nokta said: "Container shipping on the other hand could paradoxically be less positively impacted as consumers could dial down purchases of physical goods and instead spend more of their money on travel and other services again."
Clarksons Platou believes all shipping segments should benefit from an economic recovery.
"After all, shipping is a leveraged bet on world GDP growth," the analysts said.
But they warned that an economic recovery is already assumed in forecasts of world GDP dropping 4.4% in 2020. Growth should then rebound 5% next year.
The International Energy Agency (IEA) has assumed a 6m-barrels-per-day (bpd) rise in oil demand in 2021 as a result.
"That said, the capital markets had been discounting weakening oil fundamentals and Opec+ has been openly discussing delaying the much-needed production increases [for tankers]," Morkedal and Nokta said.
Consumption of jet fuel by airlines is still down between 2m and 3m bpd compared with pre-Covid days.
Recovery back on track
"Naturally, if jet-fuel demand comes back to a higher level, this would be quite positive for oil markets and tankers," the analysts said.
"Yesterday’s strong oil price increase of 7.5% for Brent is a clear signal that the market expects the recovery is not just back on track, but that growth forecasts could be raised a bit further."
Fearnley said the oil price rally is likely to be a "showstopper" for any floating storage scenarios for tankers.
Analysts Espen Landmark Fjermestad, Peder Nicolai Jarlsby and Ulrik Mannhart said: "Whilst curbing earnings near-term, we argue this is a positive for tankers as the market avoids another round of excessive inventory builds and subsequent low production/stock draw period."
Sticking to the forecast
Fearnley is maintaining its view that the first half of 2021 will be a challenging one for tanker owners, while also seeing a clearer path to recovery down the road.
The Fearnley analysts are more positive on boxships, tipping owners to gain when volumes increase as the vaccine speeds economic recovery.
For bulkers, they foresee challenges in the first six months of next year, before a potential strong recovery in the second half.
Fearnley is predicting limited good news on dry cargo volumes, as well as high fleet growth early next year.
LPG demand has remained strong throughout most of the shutdowns, with residential LPG use rising strongly in some regions, the analysts said.
The key longer-term driver could be a return to strong US gas output growth, which is likely to take some time given the inherent lag in margins and production, they added.
UK shipbroker Howe Robinson Partners said the Middle East Gulf is looking busier than of late for VLCCs.
Cargo flow to increase?
"Numerous charterers are looking in the 25 to 30 November window," the broker said.
"Sentiment-wise, this will be of benefit to the owners who will be pleased to see the enquiry."
Howe Robinson said the oil price rise on Monday was an indication of an improved demand situation that will hopefully translate into a bigger flow of cargoes.
"The list, however, is still not short of tonnage, and while we may see that owners are able to get a marginal improvement, we do still see numerous handicapper vessels which might point to a larger differential in a two-tier market in the short run," the broker said.
