The medium range (MR) product tanker market is expected to stay largely flat this year due to the accumulation of excessive shipping capacity especially over the last two years, according Stena Bulk.
Sweden-based Stena Bulk, which has a joint venture Stena Weco to operate the MR tankers, believes that its current fleet strength of about 50 MR tankers is considered substantial for the time being.
“Perhaps too many MR tankers have been contracted over the last two years. I do not think the market is going to crash but I do not think is it going to take off either,” said Nicolas Duran, general manager, business development, at Stena Bulk AB Singapore Branch.
Despite the rather flat market, Duran pointed out that Stena Weco, a joint venture with shipping group Dannebrog, has managed to remain profitable with its sizable fleet.
“The number of deliveries between now and 2016 will also mean that there will be a lid on the rates going forward. I don't think we are going to see rates recovering to $25,000-30,000 per day as the market will remain where it is today at between $14,000-18,000 per day,” he told Seatrade Global.
According to tanker broker Charles Weber, there are approximately 295 MR product tankers of between 40,000-59,999 dwt on order at global shipyards, representing 25% of the trading fleet at present.
With the orderbook at shipyards mostly filled up until the middle of 2016, the market is expected to be shielded from more shipbuilding orders and see the current capacity get soaked up.
“On the demand side we generally believe in a recovery on a macro-level in the west, which will of course be a driver for both crude and product, in addition to emerging markets' demand increase,” Duran said.
“As our MR business is more than just clean petroleum products, with all our ships being IMO III and IMO II, we expect to benefit from an increasing demand for chemicals as well as our strong position in the palm oil business, allowing us to stand on more than one leg and thereby increase triangulation and trading efficiency,” he explained.
“Oversupply is the main challenge to most shipping segments now but for MR tankers, I believe it is going to stay stable, maybe we'll see a slight improvement.”