23SEP2019 - NEWS - Long-Term Outlook Positive for Product Tankers

With big changes coming in the refinery landscape in the future, ship owners active in the clean tanker market stand to benefit from longer ton-mile demand. In its latest weekly report, shipbroker said that “over the next 5 years, the global refinery landscape will continue to evolve, with the IEA projecting that over 9 million b/d of new capacity will be added, roughly twice the level of refined products demand growth over the same time period. With over two thirds of new capacity being added East of Suez, pressure will grow on older, less complex refineries, many of which are located in Europe. Structural changes in global oil products demand and crude supply
will also significantly impact on refining margins and arbitrage, not just in Europe, but globally. In the short term, less complex refineries may lag behind, as new regulations come into play, particularly those that lack the ability to upgrade or desulphurize fuel oil. Some may turn to lower sulphur crudes although price premium  for these grades are likely to rise, impacting upon margins. However, as the refining landscape recalibrates post 2020, other structural changes will come into play. Gasoline exports have proved a key source of profitability for European refineries. However, demand growth is expected to slow in the Atlantic Basin, whilst the potential start- up of Aliko Dangote’s Lekki refinery also threatens to starve off a key outlet for European gasoline”.