25th June 2010 - Into The Knockout Stages

Looking at the tanker market over the past 12 months there has been a clear improvement in the  profitably of crude tankers, with average earnings for the first six months of this year well above last year's lows. In the clean tanker markets, MRs in the west have moved up from their extreme lows of 2009 and while developments in all product tanker categories in the east have been mixed, they remain above their western counterparts. Of course, the larger crude tankers have been very much supported by floating storage which, at its peak, kept 44 VLCCs out of the market. The industry has also benefited from the removal of another 7.2M dwt in the first half of 2010, equal to the total achieved in the whole of 2009. In mid April scrap prices reached $500/lwt in the sub continent but have since fallen back to around $400/lwt, a situation not helped by Bangladesh being temporarily out of the market.

2010 has also seen the re-emergence of shipbuilding activity, with 80 orders placed for crude carriers but a mere 15 clean tankers. Owners have taken the opportunity to place fresh orders at lower pricing levels, even allowing for recent increases in steel prices. With world oil production nearing levels last seen in 2008 and floating storage continuing to play a key role, the outlook for the larger crude carriers remains strong. However, extra time may be required for some segments of the clean sector, but with a little more luck perhaps they will avoid the dreaded penalty shoot-out.