Tanker rates have been too low this year when judged against the fundamental supply and demand balance, Fearnleys adviser Jonathan Staubo believes.
But he told a webinar that all the conditions are in place for an upturn in earnings later this year, with tonne-miles at an all-time high.
Staubo admitted there are question marks over Chinese demand and the overall global economy, and warning signs are flashing.
“But beyond that, what we know is that rates year to date have been solid, tonne-miles have risen, volumes have risen, the orderbook and fleet growth outlook remains low, with an expectation that oil demand growth will continue to grow for the foreseeable future,” he added.
“The overall outlook is a positive one, both going into the winter and also for the medium to longer term for this market, barring any macro turmoil, which is the main risk.”
Although spot rates dipped over the summer, time charter rates and asset values have held up, he pointed out.
“So overall, the bullish impulse … remains.”
The latest boost for demand has been the Red Sea crisis, which does not look like ending soon, he told the webinar.
“And we see that if anything, rates have been too low compared with the fundamentals in this market,” he said.
This is especially true for ships such as VLCCs, for which rates have been quite a bit lower than at the same time last year and also year to date.
Charterers doing their job
“And there isn’t fundamentally any strong reason for that other than poor sentiment playing its part and charterers doing a tremendous job of keeping volumes out of the open market and keeping pressure on rates,” Staubo said.
“And we expect that with normal seasonality also for volumes and tonne-miles going forward, that should boost rates quite substantially from where we are now.”
The big rise in tanker orders this year is “not yet worrisome”.
“You’re still looking at very low fleet growth for at least up until 2027,” he said.
