The tanker market got off to an unusually poor start to the year, and the market could bottom out sometime during the first half-year, writes analyst firm MSI in a new analysis.
“We view the tanker market as approaching bottom in the first half of 2021,” writes MSI.
Freight rates for both crude oil and refined oil products got off to a weak start to the year. According to MSI, rates went down in most markets in both January and February.
“Conditions are now exceptionally weak in the spot sector, with several markets seeing negative reported TCE earnings,” writes MSI.
In the crude market, supertanker, VLCC, rates nearly halved in January to USD 8,000 per day. The same trend applied to product tanker rates.
The dropping rates are largely related to weak demand for oil products. Despite large-scale vaccination programs around the world, many countries still operate with strict restrictions in an effort to limit contagion. According to MSI, this is likely to lead to a small drop in oil demand during the first quarter of the year.
While rates are moving south, ship values have been more robust, writes MSI. The analyst firm does, however, expect lower prices, but thinks the biggest price drops happened in the second half of 2020.
English Edit: Daniel Logan Berg-Munch & Ida Jacobsen
Concordia CEO fears new ship ordering rush in product tanker
Weak fourth quarter pushes Ardmore into the red
Euronav is ready to deploy USD 700 million
