After a good start of the year, tankers went full speed back to square 1 since mid-October. The Dirty tanker Index fell from 842 to 788 and is up on the year. Nonetheless adjusted TC rates on one year are still around Cash BE of $24,000 per day vs an average of $ 60,000 for the 2001-2010 period. The situation is likely to change next year, Covid 19 variant number xxx allowing. 10% of the fleet has 20 years + age and should be scrapped and very few new builds are coming. Given the uncertainty of IMO2030 and the massive orders from container ships and others at shipyards, for the first time in years, the demand for tankers is forecasted to be greater than the offer for some time which should lead to much higher day rates.
As the economy recovers, there will also be more “Oil on Water”. A possible US/IRAN deal although more and more unlikely by the days would be very supportive of tanker demand. We think today that Iran easily exports 2 million barrels a day to China at $40 a barrel using rotten old tankers that are “begging” to sink. A normalisation would send this capacity to the scrapping yards while increasing the demand for normal tanker capacity. EURONAV is the “quality” play but we also like FRONTLINE and TEEKAY. HAFNIA presents as well a good combination of Crude and Product tankers….