Jefferies expects all core markets to see an improvement in 2018.
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| New York Stock Exchange, Wall Street Photo: Wagner T Cassimiro |
Demand growth will move ahead of supply expansion in every core
shipping market in 2018, the first time in a decade that such conditions
have been seen, Jefferies says.
Both charter rates and asset values are projected to trend up across the board with the biggest wins coming in the LNG shipping and the refined product tanker market, analysts Randy Giveans and Christopher Robertson wrote in a report.
“After multiple years of cyclical weakness across all shipping sectors, global shipping markets are starting to benefit from the lack of newbuilding ordering in recent years and are now set for a very strong 2018,” they said.
“For the first time in at least 10 years, we expect capacity shortages with demand growth outpacing supply growth in every shipping sector under coverage in 2018.”
The pair believe the product tanker market is in the cusp of a "multi-year cyclical recovery", supported by robust demand growth and fleet growth in the 2% to 3% range.
In LNG, where spot rates are running at four year highs into Christmas, demand is expected to outpace supply in the coming years.
The depressed LPG space is also expected to strengthen in 2018, while dry cargo should progress.
Giveans and Robertson note that capezize rates are at the best level since 2013, with panamaxes pushing rates not seen since 2011.
“More importantly, with an even more significant vessel shortage projected over the next 12-24 months, we believe that dry bulk shipping earnings are likely to improve further,” they said.
After years of weakness, the container market is also seeing fundamental improvement at a time the newbuilding orderbook is at 13% of the trading fleet, the lowest level in 20 years.
For crude tankers, which have disappointed this winter, Jefferies says conditions will improve in the near term and further from the second half of next year.
"We believe strong global oil demand will lead to increased OPEC production levels by 2H18 at a time when crude oil tanker fleet growth should begin to slow materially,” Giveans and Robertson said.
Both charter rates and asset values are projected to trend up across the board with the biggest wins coming in the LNG shipping and the refined product tanker market, analysts Randy Giveans and Christopher Robertson wrote in a report.
“After multiple years of cyclical weakness across all shipping sectors, global shipping markets are starting to benefit from the lack of newbuilding ordering in recent years and are now set for a very strong 2018,” they said.
“For the first time in at least 10 years, we expect capacity shortages with demand growth outpacing supply growth in every shipping sector under coverage in 2018.”
The pair believe the product tanker market is in the cusp of a "multi-year cyclical recovery", supported by robust demand growth and fleet growth in the 2% to 3% range.
In LNG, where spot rates are running at four year highs into Christmas, demand is expected to outpace supply in the coming years.
The depressed LPG space is also expected to strengthen in 2018, while dry cargo should progress.
Giveans and Robertson note that capezize rates are at the best level since 2013, with panamaxes pushing rates not seen since 2011.
“More importantly, with an even more significant vessel shortage projected over the next 12-24 months, we believe that dry bulk shipping earnings are likely to improve further,” they said.
After years of weakness, the container market is also seeing fundamental improvement at a time the newbuilding orderbook is at 13% of the trading fleet, the lowest level in 20 years.
For crude tankers, which have disappointed this winter, Jefferies says conditions will improve in the near term and further from the second half of next year.
"We believe strong global oil demand will lead to increased OPEC production levels by 2H18 at a time when crude oil tanker fleet growth should begin to slow materially,” Giveans and Robertson said.