Compared with the indifferent state of the crude oil tanker sectors, the product tanker market is buoyant, helped by a surge in US oil products imports
MSI, in its latest Horizon Monthly (Oil Tankers), noted on the demand side US oil products continue to rise. In May, imports rose 12% month-on-month to 2.6M b/d. The main drivers were diesel and jet fuel imports.
Behind the rise in imports is the closure of refineries in the US.
The impact on rates varied, with MR tanker time charter earnings rising by 15% to US$9,500/day in May 2021 only to fall back to US$6,500/day in the first part of June. LR2 tankers also saw earnings decline to US$1,900/day.
Hitting sentiment was news from China that an import tax was imposed on aromatics imports, which are used in the production of gasoline. This news, plus a further reduction in the export quota for refined products exports from 28M tonnes in 2020 to 10M tonnes in 2021 will impact demand for product tankers in the East.
On the supply side, MSI is expecting a surge in MR product tanker removals from the fleet in the second half of 2021. In May 2021, recycling increased by 70% month-on-month with 0.4M tonnes. MSI forecast for the coated tanker fleet growth in Q4 2021 is for a -0.9% decrease in fleet supply.
There are encouraging signs for the MR fleet fundamentals and adding support for spot rates in the sector, noted MSI.