A Review of the Nigerian Energy Industry

2018, transition period for tanker market – Report

*Crude oil tanker.

01 January 2018, Sweetcrude, Lagos – The tanker market is geared for a transition period in 2018, as tonnage oversupply and oil price fluctuations are bound to keep adding pressure at freight rates.

In a recent note, shipbroker Intermodal said that over the course of 2017, market fundamentals cast a shadow of uncertainty over 2018’s performance.

Intermodal noted: “In a rather unconventional development, despite the fact that earnings for the sector have continued to move lower this year (2017), tanker newbuilding orders have actually increased year to date by 17%, compared to 2016.

“The most logical explanation for this has been the admittedly attractive newbuilding prices that still continue to tempt a number of owners into ordering despite a rather challenging freight market.

“When it comes to SnP activity, things have been rather steady; we are counting around 340 SnP tanker transactions so far, compared to the 333 transactions we have on record for the same period in 2016”

According to the shipbroker, tanker asset prices declined in 2017 with tonnage older than ten years naturally seeing the biggest declines in value.

“Taking into account the scheduled deliveries next year and the fairly young average age of the tanker fleet that sets a rather low ceiling to the number of potential demo candidates, we wouldn’t be surprised to see way more attractive second-hand prices next year (2018) and a consequent spike in SnP interest/activity,” the company added.

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