McQuilling Services has released its 20th anniversary edition 2017-2021 200-page tanker market outlook in which it warns tanker owners are in for a tough year, while savvy firms should look at investing in suezmaxes.
On the basis of supply side risks, McQuilling warned it expects 2017 to be a “down year” for owners of all tanker classes with VLCCs averaging around $27,000 a day and about $12,500 a day for MR2s on a triangulated basis. However, earnings in 2018 are expected to improve slightly across all tanker segments, given a decelerating supply outlook and increasing oil supply.
MR earnings on a round-trip basis are expected to be mixed with TC2 TCEs averaging $8,400 a day in 2017, while the USG/Carib round trip voyage is estimate at $12,400 a day for 2017. TC14 earnings are forecasted to be the lowest of the trades McQuilling tracks at $4,300 a day; however, on the triangulated basis (TC2/TC14) owners will earn around $12,400 a day in 2017 and increase to $14,200 a day by 2019.
For VLCCs, McQuilling projects 1-year and 3-year time charter rates to average $30,000/day and $32,000/day in 2017, respectively.
Its 2017 price forecast for the 5-year old crude tanker sectors sees VLCC values averaging $59m, a 14% decrease from the 2016 average price of $68.8m and a 1.6% decrease from current levels.
Modern suezmax tankers are projected to demand $38m in 2017; however, by 2021 the US firm projects the values of these tankers to reach $51m amid a pickup in earnings. Panamaxes values are likely to fall to $20m in 2017, with further depreciation expected to 2021.
Clean tankers of this age group are expected to see lower prices relative to their 2016 averages. For the LR2, McQuilling is forecasting a 2017 average price of $30.5m, a 33% decrease from the average price recorded in 2016, while the LR1 sector is expected to decline a more modest 20% to $25.9m. The MR2 tanker is likely to depreciate 21.8% to $20.5m; however, a recovery to 2016 levels is expected to occur in the medium term.
The IEA projects that world oil demand will grow by 1.32m b/d in 2017 with a majority of the demand growth expected from non-OECD countries. OECD demand growth is expected to stagnate in 2017, while non-OECD demand will rise to just over 51m b/d.
Crude and residual fuel ton-mile demand is projected to increase by about 0.7% on an annual basis throughout the forecast period, McQuilling reckons.
2017 demand growth is anticipated to be 0.3% while clean product ton-mile demand is expected to experience a marginal increase of 0.22% this year.