Slowing Fleet Growth Makes a Reappearance

Although the current macroeconomic environment is weighing on both the dirty and clean tanker sectors, the earnings performance of these two markets has diverged since 2010 from different supply trajectories. After single-hull removals slowed dirty tanker fleet growth during 2009-10, supply has accelerated from heavy deliveries, aggravated by the 2010 ordering burst. In contrast, the abrupt halt in clean tanker ordering that started in 2008 has flowed through the orderbook, slowing product tanker fleet growth. Continued declines in clean growth, coupled with regional refinery displacement, has underpinned the product tanker hypothesis for years, but weaker dirty tanker fundamentals and sustained supply growth have contributed to an increasingly-gloomy outlook for the sector. Slowing deliveries, continued demolition and restrained ordering, however, are suggesting further deceleration in dirty supply growth, which should drive the ultimate recovery in the dirty sector by 2014. Download here