Tanker rates at historic lows amid shifting trends: UAE's Yabhouni

OPEC crude oil sailings held almost steady in February although there are clear trends pointing to changes in the global tanker trade and indications that current weakness in the crude and products tanker market will remain weak, the head of Abu Dhabi's national tanker companies said Tuesday.
"It is very clear that the current situation in which tanker owners find themselves is not a good one. Rates for almost all segments, except LNG, are at historically low levels," said Ali Al-Yabhouni, CEO of the Abu Dhabi National Tanker Company and General Manager of the National Gas Shipping Company at a conference in Fujairah.
Al-Yabhouni, who is also the UAE's OPEC governor, said that in February alone, VLCC rates for virtually all routes had fallen by an average 15% from already low levels, with tanker rates from the Middle East to the West down by 20%. The same applied to the Suezmax market though Aframax rates bucked the trend, rising by an average 5%, he said.
East of Suez rates fell by an average 7% and the Middle East to East route posted falls in excess of 8%, Al-Yabhouni added.
"The underlying data that will eventually feed into either higher or lower rates is very mixed. For example, preliminary data shows that OPEC sailings remained almost steady in February, though there are some clear trends that point to changes in the global tanker trade," he said.
"In particular, they showed less OPEC oil is arriving at North American ports, and more in Europe and West Asia," Al-Yabhouni told delegates at the 8th International Fujairah Bunkering and Fuel Oil Forum, or Fujcon.
"If we look at wider trends in the crude oil and products tanker market, it is clear that some markets are set to remain weak," he said, adding: "In particular, the future for tanker trade to the United States is not good. Not only does the shale oil revolution mean that the US is importing less crude oil, but a growing proportion of crude imports are coming by pipelines from Canada."
The situation was mitigated by the improvement in volumes of crude oil imports from Asia with the top three importers in the region importing higher volumes of crude oil. Japan's imports in February rose to their highest level since April 2012, al-Yabhouni said, pointing out that the UAE was Japan's second-largest supplier, accounting for 32% of the country's total crude oil requirements.
Chinese imports also improved with monthly volumes in January at their highest since May 2012 while imports by India reached a record high, increasing by 532,000 b/d to average 4.1 million b/d.
Al-Yabhouni said the current state of the market was encouraging some charterers to use "their position of relative strength to unreasonably lengthen payment terms," adding that this was "a dangerous situation."
Despite these difficult conditions, the Abu Dhabi National Oil Company is committed to maintaining a strong presence in the shipping industry and the Abu Dhabi National Tanker Company, or ADNATCO, had undertaken a major expansion of its shipping fleet in recent years, al-Yabhouni said.
ADNATCO has in the past two years taken delivery of 17 new vessels, including product carriers, bulk carriers and container vessels taking the total to 30 vessels. In October, ADNATCO will take delivery of a new liquefied ethylene gas carrier, he said.
"We believe that it makes strategic sense to have a degree of ownership over the shipping fleet that takes our hydrocarbons and other products to market," the UAE official said. "Furthermore, we feel that it is important to be present across the entire hydrocarbon value chain. We are in for the long haul; we know that the low rates today will be recovered by improved rates in the future."
Source: Platts