Maritime Strategies International Predicts Tankers Profitability

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Strong second-quarter earnings are expected for dry bulk carriers in 2016 and tankers are heading for profitability levels.  Maritime Strategies International (MSI) has predicted in separate dry bulk and tanker freight forecasts.

The low crude oil prices and growing trade will lead to a firm earnings in the first half of next year.  Average very large crude carrier (VLCC) spot earnings for the Baltic Exchange’s Middle East-Japan voyage have exceeded USD100,000 a day in the first half of December.

“The crude price and VLCC rates will continue, presenting clear upside potential over the next six months,” said Tim Smith, senior analyst at MSI.  It could lead to a boom in tanker earnings of comparable magnitude in 2007/08.

But the Baltic Dry Index had fallen below its 16-year lowest ever level to 484 points as Capesize spot rates tumbled to USD5,514 per day, losing USD 827 on 15 December.

MSI expects a closing of the gap between iron ore spot and futures prices over the next six months due to the iron ore restocking in China during the second quarter.  A strong increase in Latin American grains shipments will provide a boost for Supramax tonne-mile demand.

In the tanker segment, the MSI forecast said the upside potential remained high, with a combination of burgeoning trade and continuing low prices supporting global oil consumption and suppressing domestic crude production in North America.

Tankers will start to affect the market through the second half of the year and suppress rates.

Analysis by MSI shows that at the end of the first week of December between 30 and 35% of the VLCC fleet was not underway, being either moored or anchored.

Source: Maritime Strategies International

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