- 12% Clean trading product tanker fleet tied up in storage.
- 13% of the LR2 product tanker fleet in storage, 16% of the LR1 product tanker fleet in storage, 10% of the MR2 product tanker fleet in storage.
- 10% of the storage fleet is in the contango play, and 90% of the product tanker storage activity is ’logistical storage’.
- Demand is seen to return in locations that are coming out of Covid-19 coronavirus lockdown.
Torm chief executive assessed that 12% of clean-trading long range one tankers used for floating storage, reports Riviera maritime media.
Fleet tied up in storage
Product tanker owner and operator Torm has assessed that 12% of the clean trading product tanker fleet is working in storage and 90% is in ’logistical storage’.
Torm chief executive officer Jacob Meldgaard noted this as three times higher than average.
OPEC crude cut and COVID-19
The Saudi Arabian response to the collapse of the OPEC talks on reducing crude oil production is well documented, as is the drop in demand from the Covid-19 pandemic.
Crude price drop
The result was the 90% plus drop in the crude oil price and a rush by traders to book all available storage, including tankers, based on the attractive price contango.
Surge in storage demand
This resulted in a surge in demand for storing crude oil and refined oil products.
Torm’s assessment
Regarding the impact on the product tanker fleet, Torm has assessed that 12% of the clean trading product tanker fleet is now operating in storage.
Torm defines storage as a vessel that has cargo on board that has been idle for six to seven days. The idle fleet breakdown of storage was noted as:
- 13% of the LR2 product tanker fleet in storage
- 16% of the LR1 product tanker fleet in storage
- 10% of the MR2 product tanker fleet in storage
Nature of storage
An important factor is the nature of the storage.
Torm estimates that 10% of the storage fleet is in the contango play, while as much as 90% of the product tanker storage activity is ’logistical storage’.
This means the vessels are unable to discharge the cargo.
Vessel deviation
Mr Meldgaard said that they recently deviated a vessel which had loaded on the US west coast for initial discharge on the west coast of Mexico.
That vessel was deviated to Australia, increasing the tonne-mile of that voyage by almost four times.
Is the tanker on demurrage?
Mr Meldgaard also noted that in locations that are coming out of Covid-19 coronavirus lockdown, demand is returning.
In China, where the lockdown caused a complete collapse in demand, the latest figures for April 2020 indicate that demand for oil products was 1% higher year-on-year. This is a glimmer of hope that there will be a rapid if patchy drawdown of floating inventories as the market starts to normalise.
Did you subscribe to our daily newsletter?
It’s Free! Click here to Subscribe!
Source: Riviera Maritime Media
