Despite the large correction recorded in the product tanker market during August, freight rates are expected to recover due to favorable supply and demand data.
As stated in the latest report by the shipping brokerage house Gibsons, last month saw the lowest revenue for tankers transporting oil products worldwide for the current year.
The current weakness in the market is largely due to seasonality, analysts pointed out.
LR (Long Range) tankers were adversely affected by the shift of crude tankers, such as VLCCs and Suezmaxes, to carrying product this summer, as the third quarter is traditionally the weakest period for crude oil tankers.
In Europe, handy and MR (Medium Range) tankers were affected by the reduction in tonne-miles due to the seasonal decline in regional exports.
Moreover, there was a strong seasonal decline in Russia’s refined exports, exacerbated by continued drone attacks on Russian refineries.
“As we move into the fourth quarter, factors influencing the market are likely to change,” Gibsons said.
As analysts explained, seasonal maintenance of refineries in the US, the Middle East and Russia will facilitate crude oil exports.
For product tankers, this means less competition from crude oil tankers, a key factor behind the recent decline.
Additionally, LPG prices typically increase in winter relative to naphtha due to demand for heating, making naphtha more competitive as a feedstock for the petrochemical sector.
