A year in pancake time

With the market flat in all sectors companies in the tanker trade are looking much further ahead for an upturn. The picture painted by charterers and owners is bleak. There are no bright spots anywhere in the tanker trades, although some companies are slightly more optimistic than others. Although there seems to be an upturn in container trades the rest of the shipping industry looks flat, comments Interorient.

Notes Chevron: It is the question of the day as to whether the market will go up or down. Yet there appears to be no relief from either the demand or the supply aspect, with most observers feeling that there will not be a turnaround within the next year. Some think that even this is unlikely.

Drewry Shipping Consultants argues: There is general weakness in the market for the next 12 to 18 months. Combined with this there is sufficient tonnage, so that even with improvements in demand and an increase in scrapping there is unlikely to be any marked improvement. Says Eletson: At the moment things are not too great and there are no bright spots anywhere. Over the past year things have been consistently bad world-wide but we always live in hope. It adds: The only thing that will give rise to a boom market is the unexpected – wars or things of that nature.

If one looks at demand, then it is impossible to see any appreciable rise for the next two years and everywhere is looking very weak. Companies feel that talk about a recovery in Korea will vanish when the IMF looks at the country, since they will find there are still fundamental concerns. Similarly, while there is bullish speculation about Japan?s recovery most companies think that there has been no fundamental change. The Russian economy is very poor and unlikely to have any impact on demand.

Shipowners report that when Korean and Japanese shipbuilders ask about the possibility of ordering new tonnage they will, when pushed, concur there is unlikely to be any increase in demand from their countries. Even in Europe the only slight glimmer of hope is the positive noises coming out of Germany, France and the UK, but this appears over-stoked.

Overall any recovery in the tanker market depends on the Far East. If their economies start to show an upturn in the next six to 12 months, then the prospects for the tanker market on the demand side are good. Remarks Eletson: The Far East is ticking over, but there are some signs that it is beginning to recover, yet there are so many refineries coming on line. India, for example, is now self sufficient in products. But even if the demand side shows recovery then there is still the problem on the supply side which is not looking good either.