Lloyd’s List: Outlook Dims for Product Tankers Shipping Cargoes to US East Coast

“As workers shut off the oil distillation facilities at the huge refinery on the Caribbean island of St Croix for the last time in February, experts said product tankers would benefit. They said the closure of the refinery would mean the US would be forced to source refined oil product imports from further away, creating more high-earning longhaul journeys for product tankers arriving from Europe and Asia. When another Caribbean refinery closed earlier this year, product tanker commentators were even more convinced that longer voyages to the US would bolster daily earnings. However, those higher earnings have not materialized. . . . According to fresh analysis by brokers Poten & Partners, tonne-mile demand for product tankers shipping clean products into the US east coast rose 18% after the closures of the Caribbean refineries. US east coast refineries were forced to import cargoes from Europe and India. Tonne miles from Europe rose by 3.5bn from the fourth quarter of 2011 to the first quarter of this year. Indian cargoes into the US added another 2.1bn tonne miles. So, at first blush, the loss of Caribbean cargoes looked rosy for product tankers amid this boost in tonne-mile demand from the fourth quarter to the first quarter. However, the wider picture shows that tonne-mile demand is down year on year. In fact, weak product demand in the US led to tonne miles falling 4% in this year’s first quarter compared with the same period last year.”