Red Sea disruption has created the best-ever market for tankers in terms of tonne-mile demand, analysts have calculated.
Data from Fearnley Securities and Vortexa showed an all-time high was reached for tonne-miles in March, by some distance.
And preliminary figures show demand for 2024 so far is up 4.1% compared to 2023.
The biggest impact has been seen in the product tanker market.
LR2s have been the biggest beneficiaries, seeing an 8.3% rise, the companies said.
The vessels had enjoyed a 9.9% increase in 2023 compared to 2022, as the Ukrainian war also changed trading patterns.
Overall cargo volumes have at times been higher in the past, however.
“Red Sea disruptions are absorbing the seasonally weaker period, for products in particular,” Fearnley analysts Oystein Vaagen and Fredrik Dybwad said.
“Moreover, should this last for a couple of more months (which it looks like it will), we will be out of the refinery maintenance season and come into the stronger winter markets, leaving equities attractive in our view,” they added.
The message is that there will likely be more of the same in the near future, with the potential for conflict escalation hovering in the background.
Longer journeys
Product tanker voyages have increased by 15 days on average by sailing around the Cape of Good Hope to avoid Houthi attacks, a 61% rise in journey length.
Current analyst profit forecasts for second-quarter earnings are way too low, Fearnley argued, particularly for product tanker owners.
Rates in the tanker space were generally soft on Wednesday, with crude numbers off 1% from Tuesday.
Product rates were down between 5% and 9%.
LR2 rates from the Middle East Gulf to Japan were assessed at $55,600 per day by the Baltic Exchange on Wednesday, higher than the crude tanker sizes from VLCC to aframax, as well as MRs.
This is still up 90% over the last month.
UK shipbroker Howe Robinson Partners said VLCC charterers were now working on loading dates in the final third of April.
“The market is trading slowly with charterers not feeling much pressure,” the London shop added.
US Gulf and West African markets remain relatively quiet, giving little support to the Middle East Gulf, the broker said.
“There was limited fresh enquiry on the surface of the suezmax market today, with rates trading somewhat flat. Tonnage remains in healthy supply for natural fixing windows in all areas,” Howe Robinson added.
