Over the past 2 1/2 years, the tanker market has attracted significant attention and benefited investors, particularly following the start of the war in Ukraine and ongoing hostilities in the Red Sea. However, the tanker market is diverse, with different sub-sectors responding to various factors and showing different supply and demand dynamics.
Recently, the market has experienced a “summer slump,” with decreased earnings, though still profitable for operators. According to a report by brokers Gibson at the end of August, clean tanker earnings have been the weakest of the year globally.
The analyst team at Poten & Partners has provided insights into the “LR2” segment, which includes tankers sized between 100 kdwt and 115 kdwt, used for transporting refined products. Their early September report noted a shift from earlier strength in the LR2 market to recent weakness, with suggestions about future trends.
Source: wikipedia.org
Poten also highlighted the importance of vessels with coated tanks, which offer flexibility in cargo choices. They noted that the weakened crude oil market during the summer of 2024 led vessels to switch to product tanker runs, reducing earnings. Looking ahead, Poten predicts a recovery in freight rates for clean Aframaxes (vessels between 80 kdwt and 120 kdwt) during the winter. They expect VLCCs to return to crude transportation, and increased demand for Asian petrochemicals to boost long-haul product trades.
Fearnley’s, a leading shipping broker, aligns somewhat with these views. Their weekly report for early autumn indicates stable rates for Aframaxes, though with soft undertones. They anticipate that once geopolitical issues, like the shutdown of Libyan oil exports, are resolved, cargo influx will increase, putting pressure on rates.
Gibson also forecasts an improvement in the clean tanker market as Q4 approaches. They expect seasonal refining maintenance in the US, Middle East, and Russia to boost crude exports. Additionally, weather factors in the Northern Hemisphere and increased European shortfalls in distillates will drive up freight volatility and support greater East/West flows.
