The ongoing shift in refined merchandise commerce patterns is prone to strengthen the demand for merchandise in 2023, sustaining enticing vessel earnings.
Europe’s efforts to displace Russian refined merchandise are proving to be constructive for the product tanker market since alternative barrels are coming from distant markets such because the Center East, US and Asia.
Russia, then again, is looking out for newer locations for its refined merchandise for the reason that EU sanctions have come into impact from 5 February 2023. Though it is going to be troublesome for Russia to completely divert its refined merchandise from Europe to different consumers, Russian product exports to Turkey, Morocco, China and even India have elevated after the embargo.
Russia’s exports to Turkey, Morocco and different African international locations won’t add to the tonnage demand of product tanker transport as they’re short-haul commerce routes just like Russia-Europe. Nonetheless, any surge in China’s naphtha imports from Russia on the expense of the Center East will increase the tonne-mile demand for product tankers. Nonetheless, as China is a small importer, the scope for development on this commerce is proscribed.
Naphtha and gasoil/diesel cargoes from Russia to Brazil have change into frequent with commerce of 0.3 million tonnes and 0.1 million tonnes of naphtha and gasoil/diesel, respectively, within the first two months of 2023. Nonetheless, we consider Russian cargoes will seemingly displace product volumes from the Center East and South Asia, resulting in a modest decline in tonne-mile demand for product tankers.
Surprisingly, Saudi Arabia, one of many largest exporters of diesel within the Center East, has began importing Russian diesel since March 2023, claiming that it imports refined merchandise from varied sources to fulfill the home demand. Nonetheless, we consider Russian diesel imports by Saudi Arabia will inflate the latter’s diesel surplus, which in flip will finally transfer to Europe, growing the worldwide diesel commerce and tonne-mile demand. Whereas it’s too early to think about this as an rising pattern, it has the potential to spice up the already sturdy product tanker market.
Rise of exports to Saudi Arabia
Saudi Arabia imported 0.3 million tonnes of gasoil/diesel from Russia till 10 March (post-sanctions), greater than six occasions the imports of 41,900 tonnes in 2022, with the complete quantity being imported in December.
If Russia exports solely 0.25 mbpd of refined merchandise to Saudi Arabia in 2023, in keeping with its commerce in March, it can generate incremental demand of 44.4 billion tonne miles for product tankers, which is able to take up 25 extra MRs on this new route.
Conclusion
Though a transparent image of the complete shift in refined merchandise commerce is but to emerge, Drewry anticipates constructive tonne-mile development and extra vessel demand in 2023.
Supply: Drewry Maritime Analysis
