China’s ongoing issues with Covid-19 are proving helpful to product tankers though eased pandemic restrictions could end that, BRS Group said.
The French shipbroker said in its weekly note on Monday that rolling lockdowns were causing Chinese oil demand to contract by 400,000 barrels per day, leaving some oil products for export despite decreased runs.
“One big plus for tankers and indeed, the global economy, is that low end-user demand in China is leaving more refined products available for export,” the broker said.
“Beijing has reacted to this and issued new batches of refined product export quotas over recent months, with the fourth batch released last week. Although the combined volume of these quotas is around one-third lower year-on-year, this has helped to support product exports at a time when it initially seemed as though they might plummet in the wake of Beijing’s mooted ban on high specification transport fuel.”
For crude tankers, tonne-miles have only dipped by 6% despite the significant drop in oil demand, with BRS arguing the support came from imports of Russian crude. It expects the trend to continue so long as Europe continues shunning Moscow.
The lockdown issue in China could be changing, however, with BRS Grop[u predicting Covid-19 would be high on the agenda at the National Congress of the Chinese Communist Party next month.
If pandemic restrictions are eased, crude tankers would benefit from increased demand, but product tankers could be hurt if Beijing decides to curb oil product exports.
“This would likely cripple clean tanker, and especially MR, demand in Asia as 80% of Chinese product exports remain in Asia,” BRS said.
