The third quarter of 2017 has seen tanker fleet utilization drop to levels last seen in 2013, according to the latest report from Clarksons Platou Securities.
The fundamentally soft conditions in the market were further aggravated by seasonal weakness and reductions in Saudi Arabia’s crude exports in August.
The export cuts have pushed down daily earnings for Very Large Crude Carriers below USD 10,000 in August, while the lingering effect of seasonal weakness protracted into September further impacting earnings, the report reads.
“However, we expect that Q3 2017 will represent the bottom or near bottom of the current market cycle. The anticipated reduction in fleet growth in 2018 means that we still anticipate that this downturn will be relatively short in duration and we do not believe that 2017 marks the start of a sustained downcycle,” Clarksons Platou said.
As indicated, the cyclical upturn is expected to take place in 2018. Next year, a considerable part of the fleet is expected to reach or even surpass 20 years of age and will likely start heading to scrapyards, aiding to restoring balance in the demand-supply ratio.
The orderook for deep-sea tankers has fallen in 2017 and represents 11.8 % of the existing fleet, a historically low level, according to Clarksons Platou’s data.
Furthermore, restricted access to capital and reductions in yard capacity are expected to keep ordering of new tonnage at bay.