The Q3 2024 Shipping Market Overview & Outlook from BIMCO has been released which features an analysis of the tanker shipping market regarding supply and demand.
According to Niels Rasmussen, BIMCO’s Chief Shipping Analyst, the supply/balance is forecast to strengthen in 2024 but weaken slightly in 2025 as newbuilding deliveries increase.
Supply/demand balance
Despite weaker cargo volumes during the first half for both the crude and product tanker markets, they forecast a recovery during the second half and that both markets on average will see a stronger 2024 than 2023.
Muted fleet and supply growth in both markets during 2024 is a key enabler for the relatively significant strengthening of the supply/demand balance predicted. Longer sailing distances due to rerouting of many ships via the Cape of Good Hope help ensure strong tonne miles and demand growth in 2024 even if cargo volume growth is limited. By 2025, they base their forecasts on the assumption that attacks on ships in the Red Sea may have ended, allowing ships to use normal routings throughout the year.
Though we predict stronger growth in cargo volumes during 2025, the shorter sailing distances caused by the assumed return to normal routings will have a profound impact on tonne miles and therefore demand for ships.
..BIMCO stated.
Combined with weak supply growth, BIMCO therefore estimates that the crude market’s supply/demand balance will weaken only slightly during 2025. On the other hand, the product tanker market will see a rapid expansion of supply in 2025 as the many ships recently contracted will begin to be delivered. As such, they forecast a potential for a significant weakening of the product tanker supply/demand balance.
Demand
In BIMCO’s main forecast scenario, they assume that a solution to the crisis in Israel and Gaza may be found this year which could in turn also bring the Red Sea attacks to an end. The scenario therefore includes an expectation of a return to normal Red Sea and Suez Canal routings throughout 2025, whereas the status
quo is expected to last throughout 2024. The lower than expected oil demand in 2024 impacts both crude and product tankers. In fact, first half cargo volumes in both sectors have been lower in 2024 than in 2023.
We do forecast that cargo volumes during the second half of the year will return to growth but full year volumes for both sectors will still end very close to 2023 levels. However, longer sailing distances around the Cape of Good Hope rather than via the Suez Canal means that our tonne miles forecast predicts growth for both sectors in 2024.
..BIMCO said.
We forecast that crude tanker cargo volumes growth will range from -0.5% to +0.5%. For 2025, our forecast is positive growth of 1.5- 2.5%. Due to the longer sailing distances, tonne miles are forecast to grow 4.0-5.0% in 2024 whereas the assumed return to normal routings in 2025 results in tonne miles growth of only 0.0-1.0% in 2025.
..BIMCO stated.
Supply
In line with our previous forecast, we estimate that the crude tanker fleet will grow 0.5% during 2024 and 1.2% during 2025.
…BIMCO said.
Product tanker fleet growth is estimated to be 1.6% and 4.8% during 2024 and 2025 respectively. Compared to their previous forecast, they now expect slightly slower growth in 2024 but slightly faster growth in 2025. Total estimated growth during the two years, however, remains unchanged.
