Aframax tanker supply could be gradually diminished said shipbroker Gibson in its latest weekly report, thus helping freight rates in this tanker sub-market.
Gibson said that "there are currently 920 Aframaxes trading (accounting for around 20% of the whole tanker fleet) with an average age of 9 years.
Around 27% of the Aframax fleet is coated. During the period 2006-2008 Aframax new building levels competed with the MRs as the ship-owners new build vessel of choice, but today the story appears to be very different" it said.
Gibson added that "the current order book for Aframaxes is around 6% of the existing Aframax fleet, at just 58 vessels of which only 18 are coated. This is the smallest growth seen in any of the tanker sectors with an average of 11% growth forecasted across the whole fleet.
The number of new Aframax orders placed so far this year is a mere 7 and accounts for only 7% of orders across the entire tanker fleet.
Whilst in the last decade high investment led to a rapid growth in Aframaxes, we anticipate that 2012-2014 will see around 90 of the current fleet scrapped verses newbuild deliveries (replacements) of just 52 units.
Scrapping still remains popular in this market sector as, amongst others, a number of single hull units are likely to be phased out imminently.
The older double hulls are increasingly becoming uncompetitive on bunker consumptions compared to the modern fleet, encouraging a vessels trading lifetime to be shortened from the traditional 25 years to as low as even 15 years" the report said.
It also mentioned that "history shows the dirty market has traditionally outperformed clean trading returns, encouraging more to trade dirty when the market conditions allow.
However the future may be very different.
With forecasts of Middle East product exports predicted to increase dramatically from current levels of circa 0.7 million b/d to closer to 1.7 million b/d, an increase in the demand for clean Aframaxes is highly likely to lead to a further reduction in vessels trading dirty".
Concluding its argument, Gibson said that "we suggested last week that European demand would be flat to marginally positive for Aframax trade. That, coupled with a contracting fleet size and an increase of vessels needed for the LR2 trade, suggests there could be some more positive news for the Aframax owners in the future – ok, so not too the levels seen earlier this century and not in the short term – but 2014 and beyond could prove more profitable than the order book suggests".
Meanwhile, in the Middle East tanker markets this week, "VLCC owners hoped for some pre-Chinese holiday momentum to develop, and then work to their favour, but volumes never reached the level to achieve critical mass, and the week ended with rates having been chipped a little lower to around WS36 East WS 24 West, and will stay that way over the next period. Aframaxes slipped off to 80,000 by WS 115 to Singapore as activity slowed, but there's still a firm enough sentiment to maintain that mark for the time being" Gibson said.
In the West Africa market, the shipbroker noted that "no joy at all for Suezmax owners here as charterers largely withheld from getting involved, and that set rates hard at no better than 130,000 by WS55 for US Gulf, with some further discounting still possible.
VLCC's existed upon an almost exclusively eastern diet that didn't allow for any fat to build.
Rates operated at a little under $3 million to West Coast India and threatened lower than WS 40 for the next deals to the further East" Gibson said. In the North Sea, "unrealised hope meant Aframax rates remained at close to 80,000 by WS 85 cross UK Continent, and 100,000 by WS 62.5 from the Baltic and as long as tonnage outweighs demand to the same degree, then there will be no hope of a rate rise.
Winter factors remain some way off. Suezmaxes saw virtually nothing and should be marked at no better than 135,000 by WS 50 for US Gulf and VLCC's couldn't take advantage of their temporary tight supply as fuel oil "arb" differentials contracted and kept traders largely away from the marketplace but theoretically rates to Singapore move at around $3.3 million", Gibson said.