China’s worst floods for 100 years are having a significant impact on the tanker trades. The country has been battered by heavy rains for most of this month with many dying in extreme floods and growing concern about whether or not the massive Three Gorges Dam can withstand the deluge.
Reduced demand due to the flooding will have a negative impact on the economic recovery from the Covid-19 downturn, tanker brokers Poten warned in a new report. This will likely lead to lower crude oil imports in the coming months, and some “headwinds” for the crude oil tanker market, as Chinese inventories are already high from the elevated price-driven crude purchases in April and May, Poten suggested.
“Surplus petroleum product availability will lead to increased product exports and affect refining margins in the region. This, in turn, could help the product tanker market,” the New York brokerage predicted.
Singapore-based Eastport Maritime noted how shipping on the Yangtze River has been disrupted, boosting storage costs and port congestion.
Textile and polyester fibre plants have reduced operating rates partly due to the floods. This will add to the oversupply of purified terephthalic acid (PTA), Eastport observed.