In the second half of 2022 the recovery of fares for tankers

By George George

The future of the tanker freight market looks uncertain in 2022, as despite estimates for increased demand, the growth of the fleet and therefore the expansion of the tonnage on offer raises doubts about the magnitude of the recovery.

At the same time, pandemic mutations are restricting any upward movement in the market in the last days of 2021, a year in which fares at the spot have reached and remain on several trade routes at negative levels.

“Omicron” brings “clouds”

“There is a lot of uncertainty out there,” the head of Okeanis Eco Tankers, interests of the Alafouzos family, Giannis Alafouzos, recently stressed before analysts, on the occasion of the appearance of the “Omicron” mutation.

“We saw some upward movements in the market, towards the end of the third and the beginning of the fourth quarter” commented, for his part, the COO of the company, Aristidis Alafouzos, who pointed out that steamers with eco specifications and scrubbers benefited the most.

The positive signs appeared, he explained, on aframaxes in Asia, the Mediterranean and the US Gulf, then on suezmaxes in the East and West and finally on super-tankers (VLCCs).

“Unfortunately, however,” Mr. Alafouzos continued, “the market weakened a bit at the end of November and now, given the news of the Omicron mutation, I’m not sure we will see any strengthening action in December.”

“Despite the significant progress in the pace of vaccinations worldwide, the new waves of coronavirus cases are endangering the improvement of the demand and the market as a whole” points out to Capital.gr the head of market analysis of Optima Shipping Services, Angelika Kemene.

“As for the Omicron mutation, we estimate that it will mainly affect jet fuel in Africa and Europe and possibly affect the demand for transport fuels on the European continent. People have not yet been able to control the virus and this will continue to weigh on the market.” “as well as the global economy, with negative consequences for the tanker industry.”

How will it close in 2021

“The improvement expected in the market in December will be limited by the levels of global oil demand, which will remain lower than in 2019, due to the fact that OPEC + will not release significant volumes of crude oil by 2022, and finally “from the recent decision of major importers to use their strategic reserves in the midst of high oil prices internationally,” the analyst underlines.

According to Ms. Kemene, demand for crude oil tankers is expected to decline by 2.5% in 2021, after falling by 6.5% in 2020. At the same time, he reports that demand for oil tankers is expected to increase by 8, 5% – down from almost 10% last year – but fuel costs remain too high to lead to a profit environment.

Moderate rise in 2022

However, with the “look” at 2022, Ms. Kemene estimates that there will be upward movements in the market, as demand is projected to increase by 6-7%. “The gradual easing of OPEC + restrictions on production over the next year indicates that the most significant improvements in the market are expected to be observed during the second half of 2022,” he notes.

In the second half of 2022, the president and CEO of Olympic Shipping, which manages the ships controlled by the Onassis Foundation, George Karageorgiou, also spoke about the recovery of the industry, speaking recently to Capital.gr.

He estimated that the impressive numbers that the market saw in March 2020 will not be recorded.

Of course, a decisive factor for the evolution of the supply-demand balance and consequently the course of the fares is the development of the fleet. “Despite the modest increase in the fleet in 2022, its total capacity at the end of next year is expected to be 7% higher than that at the end of 2019,” said Ms. Kemene.

“Perhaps this is a sign that market growth in 2022 may be limited to some extent, as demand for tankers next year is estimated to be around the same level as in 2019,” the analyst concludes.