Barry Rogliano Salles (BRS Group) is tipping product tankers to continue benefitting from refinery dislocation.
The French shipbroker said in a note on Wednesday that refining capacity will rise 1.1m barrels per day on a net basis in the months ahead, with the closure of some smaller refineries offset by restarted facilities in France and Malaysia and expansion projects, primarily in China.
With refinery capacity growing in Asia and demand coming from the Atlantic basin, product tankers will benefit, the shipbroker said.
“As we have consistently flagged, the recent drawing of refined product inventories has unmasked numerous mismatches in regional product supply and demand which will need to be rebalanced by seaborne trade,” BRS Group said.
“Over the coming months global refinery throughputs are projected to rise by over 1m [barrels per day] to 83m barrels, a post-pandemic high, which will lead to an increase in refined product trade.”
The broker said LR product tankers will be the primary beneficiaries, rather than smaller MRs.
A similar prediction was made by Vortexa in late July, with its analyst Ioannis Papadimitriou arguing LR2s would “take the spotlight” from MRs moving forward with more long-haul voyages emerging as much of the developed world moves to diversify away from Russian oil.
Atlantic MR tanker rates have mounted a sharp decline in recent weeks, with the Baltic Exchange’s estimate of earnings falling to $25,839 per day on Wednesday, down from a year-to-date peak of $70,564 per day on 3 August.
BRS suggested crude tankers will not fare as well as LR product tankers, with Chinese crude oil imports falling to their lowest level since 2018, with export declines expected from Iraq and potential impacts from larger refineries opening in Kuwait and Nigeria.
“Nonetheless, any increase in Chinese throughputs should favour VLCCs as these transport 85% of Chinese seaborne crude imports,” the broker said.
