Oversupply issues, coupled with moderate oil demand growth, competition from VLCCs and Suezmaxes, as well as low scrapping activity appear to be hindering the future prospects of the Aframax tanker market, according to a recent research report issued by German bank DVB Bank.
Although 2009 was the worst year for the Aframax market in over a decade, the DVB's report said, the market fundamentals indicate that the worst is yet to come. “The amount of tonnage delivered over the past couple of years, combined with the tonnage scheduled for delivery in the next two years and the low proportion of scrapping are bound to result in an oversupply that can keep the lid on Earnings for a significant period of time. The IMO 13G phase out will not be enough to balance fleet supply and demand.
Although 2009 was the worst year for the Aframax market in over a decade, the DVB's report said, the market fundamentals indicate that the worst is yet to come. “The amount of tonnage delivered over the past couple of years, combined with the tonnage scheduled for delivery in the next two years and the low proportion of scrapping are bound to result in an oversupply that can keep the lid on Earnings for a significant period of time. The IMO 13G phase out will not be enough to balance fleet supply and demand.
Demand for Crude Aframaxes is already low and because of the marginalisation of the fleet, it will at best stay flat in the years to come, despite any increase in World Oil Demand. To turn the tide, owners need to start scrapping and cut down on orders. It makes no sense flooding the market with NB tonnage just because newbuilding prices are so low, when all signs point to a continuation of the slump for the Aframax market. Low earnings and a highly competitive market will most likely drive some owners burdened with high debt to put relatively new vessels up for sale, creating some good opportunities for Second-hand acquisitions. The forecast for 2010 and 2011 is weak, but if owners as a whole act within reason, there is good chance the market will start recuperating by 2012,” said DVB.