Consolidation and partnerships between companies will be crucial for the tanker sector to keep abreast of the energy transition, said Lois Zabrocky, president and CEO of tanker firm International Seaways, says an article published on sp global website.
VLCC freight rates
S&P Global Platts assessed VLCC freight rates between the Arab Gulf and China at an average of $6.09/mt in 2021 to date. The average in 2020 was $13.44/mt and in 2019 it averaged $12.52/mt. Aframax US Gulf Coast-UK Continent assessments have averaged $14.29/mt in 2021 so far, compared with $20.01/mt in 2020 and $21.06/mt in 2019.
One potential response is to get together. “I think that as tanker companies, we have to consolidate, we have to get larger,” Zabrocky, said during a panel discussion in S&P Global Platts’ Global Executive Virtual Conference.
Merger
International Seaways Inc. and Diamond S Shipping Inc. announced a merger which will form one of the largest US-listed tanker companies. The combined company will have a total of 100 tankers, making it the second largest US-Listed tanker company by vessel count and the third largest by tonnage, with a value of approximately $2 billion, according to the statement.
The announcement came amid difficult times for the tanker sector but with the promise of higher oil demand ahead.
Freight rate optimism
The tanker market will only return to profitability when oil inventories normalize and oil demand returns to pre-coronavirus levels, which is only likely “at some point in the next 12 months,” tanker operator Euronav said.
The tanker market is entering what should be the more profitable half of the year and S&P Global Platts Analytics believes sustainable increases in freight rates are achievable, rather than the spikes the market has seen so far in 2021, causing only uncertainty for charterers and other industry players.
“Shipowners across all markets are attempting to harness the positive sentiment to push freight rates higher alongside expected increases to Brent and WTI,” Platt Analytics said.
Summary
- Consolidation and partnerships between companies will be crucial for the tanker sector to keep abreast of the energy transition.
- S&P Global Platts assessed VLCC freight rates between the Arab Gulf and China at an average of $6.09/mt in 2021 to date.
- International Seaways Inc. and Diamond S Shipping Inc. announced a merger which will form one of the largest US-listed tanker companies.
- The tanker market will only return to profitability when oil inventories normalize and oil demand returns to pre-coronavirus levels, which is only likely “at some point in the next 12 months.
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Source: spglobal.com
