Q2 earnings season commences with strong earnings and shows ton-mile growth
The first tanker earnings of the Q2 reporting season kicked off last week, with Scorpio Tankers and Teekay Tankers reporting earnings. Scorpio Tankers boasted historic earnings for Q2, typically a seasonally weaker quarter than Q4 and Q1, as product tanker earnings remained sustainably high during Q2 2024.
Both companies anticipate strong rates going into Q4, a seasonally strong quarter for tankers, driven by low vessel growth alongside elevated ton-miles. Scorpio Tankers have reported 7.5% year-on-year in growth in ton-miles in 2024, largely due to Houthi attack-driven avoidance of the Red Sea. With the conflict in the Middle East only intensifying, this dynamic is set to continue, which will likely support favorable rates.
“Ton-mile growth and very limited vessel deliveries creates strong market conditions”
Rising volumes from the TMX Pipeline in Canada have also supported the tanker market, particularly the Aframax segment. The pipeline expansion is still ramping up towards max capacity, with Teekay Tankers reporting current operations are around 60% of capacity, or around 300 kb/d, with 20 vessels loaded in June. The ramp-up to full capacity is likely to boost demand for Aframax vessels on an ongoing basis.
Aframax ECO, 12 months TC
Aframax, Average spot
Suezmax ECO, 12 months TC
Suezmax, Average spot
Source: Clarksons Research
Ammonia demand from Japan and South Korea set to skyrocket towards 2050
The International Chamber of Shipping (ICS) has released a report highlighting the significant need for an expansion in the fleet of ammonia carriers to meet the hydrogen import demands of Japan and South Korea.
Japan and South Korea are expected to become major importers of hydrogen as part of their strategies to decarbonize their economies. The report underscores the critical role of ammonia as a carrier for hydrogen, given its higher energy density and easier handling compared to liquid hydrogen.
The ICS report also claims that the current fleet of ammonia carriers needs to more than double to accommodate the projected hydrogen import demands of Japan and South Korea by 2050. Even shipping just 5% of the global hydrogen demand by 2050 will necessitate the construction of hundreds of new ships.
China increasingly takes the top auto exporter title across global markets
Chinese electric vehicle (EV) manufacturers are expanding their global focus, making greater forays into the Middle East and major emerging markets like Brazil and Russia as they diversify their export destinations in line with their ambitions to lead the global auto market.
China has become the largest vehicle exporter to Israel this year, driven by EV sales, while making substantial market share gains in emerging markets including Brazil and Russia. This story mirrors the renewed strategy of BYD, China’s and the world’s largest automobile producer. BYD increasingly pursues global markets to satisfy its ambitious production expansions and relies on maritime exports, largely serviced by PCTC vessels, to satisfy its global demand to Europe, the US, LATAM and more. Continued growth of vehicle exports in China remains key to supporting the very high demand experienced in the car carrier market.
5000 CEU – 12 months TC
6500 CEU – 12 months TC
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