Another year of higher demand for product tankers
But the ongoing structural shift that’s negatively affecting crude tankers is making product tankers slightly more favorable. For product tankers, an estimated year-over-year demand growth of 4.6% is expected to outpace supply growth of 3.3% this year. Although the product tanker sub-industry was also negatively affected by large amounts of new ship orders that were placed before 2008, demand growth is more encouraging.
Driver of higher demand
Since 2009, demand growth has been rising on global economic recovery and increased exports of refined oil out of the United States to Latin America. Large refining capacity additions in India have also made it sufficient for India to meet its own domestic oil consumption and to export the excess capacity. As India’s Minister of State for Petroleum & Natural Gas, Panabaaka Lakshmi, recently said, “The refining capacity is not only sufficient for meeting domestic consumption requirement but also leaving a substantial surplus for export of petroleum products.” New additions of refining capacity in the Middle East, which has traditionally driven crude oil shipments, is also contributing to higher product tanker demand.
With Latin America soaking up much of the increase in U.S. product oil export, which rose from just 1 million barrels per day to an approximate 2 million barrels per day in 2013, demand for L2 (Aframax), L1 (Panamax), and MR product tankers has been on the rise. This has positively benefited firms such as Navios Maritime Acquisition Corp. (NNA) and Scorpio Tankers Ltd. (STNG) that are more exposed to product than crude tankers.