This year's downward shift in tanker demand is "no surprise", industry association Bimco said, as reduced refinery throughput growth and high stock levels restricted shipping activity. These factors — combined with heavy tonnage growth — will cause average earnings to fall below 2014 levels in all tanker segments other than very large crude carriers (VLCCs) this year, said Bimco.
Refiners and traders — particularly in Asia-Pacific — reduced purchasing activity this year. And, while the summer is traditionally a period of muted activity, the supply glut of crude and oil products "brought an end to the strong freight market enjoyed since the second half of 2014".
High stocks "have created a situation where the demand for tankers to balance out local or regional imbalances of refined oil products has become quite limited". Consumption of oil products remains "the factor to watch out for as the overarching driver of demand", Bimco said, with the industry association noting the IEA anticipates oil demand growth to slow next year.
But developments in the Americas and Asia-Pacific have supported tanker markets this year. The US government's decision to lift a ban on crude exports in December added demand. US crude exports averaged 499,600 b/d in the first five months of 2016, nearly 2pc more than in the same period in 2015.
US trading partners also changed. Total crude exports to countries other than Canada exceeded Canada-bound exports in March for the first time since April 2000. Crude imports to the US Atlantic coast also increased, firming demand for seaborne oil trade.
Rising Chinese products exports — which increased by 51.7pc over the first seven months of 2016 — lent support. Exports were mostly directed to Hong Kong, Singapore, Panama, South Korea and Vietnam.
China is expected to continue increasing its crude imports over the remainder of 2016, but at a slightly slower growth rate. Bimco said China's Strategic Petroleum Reserve (SPR) "appears to be full", meaning China's independent so-called teakettle refiners will play a larger role. But importing activity by these refiners contributes reduced vessel demand compared with national refiners, which typically import crude from further afield.
Bimco expects increased crude imports to the US and India over the remainder of 2016, while European imports will remain on par with 2015.
