Growing ton-mile demand offers hope for suezmaxes and aframaxes

Growing ton-mile demand offers hope for suezmaxes and aframaxes

Growing ton-mile demand offers some hope for hard-pressed owners of suezmax and aframax tankers, according to the latest weekly report from Poten & Partners.

The New York broker reports that over the first four months of this year, ton-mile demand for suezmax tankers actually increased by 7% compared to the prior year as suezmaxes performed on average 27.5 more voyages per month.

The strongest growth was on the Middle East to India route, which increased from an average of 28 cargoes per month in 2017 to 39 this year. A large part of the growth was due to increased Iranian exports to India, which could be threatened in the second half of the year by the reinstatement of US sanctions on Iran. Suezmax tankers also managed to recapture some market share in West Africa from VLCCs as less West African crude moved to Asia. Europe bought more West African crude, resulting in an increase of about 10 monthly voyages. Suezmaxes also benefited from the growing exports from the US Gulf.

However, over the last 12 months, the suezmax fleet increased by 39 ships, equivalent to 7%, thereby offsetting the growth in demand.

For aframax tankers Poten described the situation as “mixed”. Ton-mile demand from crude oil trades increased by 9% in the first four months, even though the number of voyages decreased.

Fortunately, for owners the total aframax fleet increased by only 10 vessels or about 1% of the fleet, helped by relatively strong demolition numbers.

“Looking at the earnings, both suezmax and aframax segments appear to be in dire straits,” Poten warned in its conclusion, adding a happier note to finish: “However, underlying ton-mile demand growth is healthy, sowing the seeds of a recovery if supply growth can be contained.”

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

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