Bulker and boxship owners are enjoying their best earnings in years. Could tanker owners be next in line?
In a research note published on Thursday, Alphatanker said shipowners in the tanker spectrum are hoping for a “supercycle” later this decade.
But the AXSMarine research unit believes owners are unlikely to experience the high earnings seen between 2003 and 2008 as the world is moving away from oil.
With more environmental regulations to combat climate change, Alphatanker expects global oil demand to peak in the early 2030s.
“Between now and then, growth will gradually decelerate driven by increasing vehicle efficiency gains and the movement away from oil to other cleaner fuels in certain sectors such as shipping and electricity generation,” Alphatanker analysts wrote.
“It will be difficult for the tanker market to experience another supercycle such as [the one] experienced over 2003-2008 since tanker demand growth will be significantly lower.
“This does not mean that tanker demand will imminently decline, but that the pace of tanker demand growth will decelerate.”
Potential for bulkers
Bulker markets have staged a strong recovery since last year amid talk of supercycles in commodities markets.
Vessel earnings in June were their strongest since September 2008 and more than double the 2020 average so far this year.
“This has been largely driven by rebounding economic growth and especially China’s thirst for commodities be it iron ore, coal or grains,” Alphatanker said. “Furthermore, this incremental demand has unmasked inefficiencies in the fleet.”
While some shipping executives suggested the expectation of a bulker supercycle could be unrealistic, Alphatanker has taken a rather bullish stance.
“Analysis suggests that this dry bulk shipping cycle is unlike any previous cycle and thus there remain several long-term factors which could support and extend the sectors recovery and peak phases and eventually lead to a supercycle,” Alphatanker said.
“Evidence suggests that China has been behind much of recent strength in global commodity prices … China is in the process of developing its infrastructure in the interior of the country with this helping to fuel rampant steel demand.”
Orderbook issues
Container shipping rates have risen to all-time highs due to strong European and US imports, tight vessel supply, and logistic chain disruptions, according to experts.
But Alphatanker said the strong upturn will eventually end.
“As we have seen in previous cycles, when these vessels are eventually delivered, this exerts fleet-side pressure on hire rates and markets generally enter the collapse phase of the cycle,” Alphatanker said.
Separately, industry data shows the tanker orderbook size is the smallest in years in proportion to existing fleet.
Analysts said tanker earnings could be boosted by a lack of deliveries in 2023 and 2024 but that a supercycle is still unlikely.
“Any catalyst for a tanker supercycle will have to be fleet-driven such as by a period of extremely high scrapping,” they wrote.
“Even considering tighter future environmental regulations, we remain pessimistic that such conditions will materialise.”
