Product tanker market to suffer in 2013

The product tanker market is expected to continue to suffer in 2013 due to the adverse economic environment and the resulting global loss of demand for oil products. That’s according to Danish Ship Finance which released its October Shipping Market Review today.

The company says that the market is still troubled by the overhang of tonnage from previous years and new ordering. a recovery is unlikely before fundamentals improve.

Writing in the report, Danish Ship Finance says:

”As of August 2012, the total orderbook stood at 11.8 million dwt. That means one vessel for each ten at sea is scheduled to for the coming years. Actually, the orderbook/fleet ratio is increasing as orders being placed are outgrowing deliveries. The bulk of orders consist of MR tankers which account for 64% of the total orderbook.

With almost 3.4 million delivered so far this year, one might think that fleet growth would come to a halt this year. However, another 3.6 million dwt – or the equivalent of 29% of the August 2012 orderbook is still scheduled for delivery in the last four months of 2012. In 2013, another 5.4 million dwt is scheduled to join the fleet. “

The company also believes that postponements and cancellations are set to increase.

“Taking the previous postponement activity into account, we estimate that as much as 1.5 million dwt will be postponed to 2013 in the last four months of this year and another 1.2 million dwt will be postponed from 2013 in 2014. Cancellations are also expected to reduce actual deliveries in the remainder of 2012 and in 2013. We predict that about 0.3 million dwt will be cancelled in the last four months of this year and that another 1 million dwt scheduled for delivery in 2013 will be cancelled. Consequently, 1.7 million dwt is expected to be delivered during the rest of 2012. Given these assumptions we expect that 4.6 million dwt will be delivered in 2013.”

Click here to download a full copy of the report.