Oil cargo imports on par with those of dry bulk in 2006
Dry and liquid cargo quantities globally have reached parity after 15 years, with 2.6 billion tons shipped from each category during 2006. Back in 1991, the total quantities of dry and liquid cargoes imported globally had come to 1.573 million and 1.565 million tons respectively. In 2006 the increase recorded may have been equal, but its course has been entirely different. The oil trade developed much faster during the 1990s, while the trade of dry cargoes has only displayed remarkable growth in the last five or six years. One way or another, the shipments by tankers and by dry bulkers reached 2.6 billion tons each last year. The fleets used were also similar in size and capacity, as tankers totaled 365 million deadweight tons, against 368 million dwt of dry-bulk capacity. Since 2000 dry-cargo trade has grown twice as fast, reaching a 5 percent annual rate, against 3.1 percent for the oil trade. Now that after many years the two categories have come to the same level in absolute figures, the question for analysts is which one will develop faster in the next five years. Until recently, investments headed toward tankers. In 2006 investment in tankers was three times as high as that in dry-bulk vessels, $51.5 billion against $16.9 billion. This was mainly due to the scheduled withdrawal of single-hull ships in 2010, while recently there has been a significant swing toward dry-bulker orders, especially for capesize vessels; traditional shipowners are actually reported to be relatively worried about the high number of orders placed. New ‘green’ routes The increase of clean cargoes (gasoline, kerosene etc) has led to the establishment of new routes in the last few years. The main reason is the regionally imbalanced demand in relation to supply of clean cargoes. Data show that clean cargoes from the Far East to the West Coast of North America grew from 2.1 million tons in 2005 to 3.2 million tons last year and if this trend continues throughout 2007, it could reach 5.5 million tons. This demand for high-standard clean products with the West Coast of North America as their destination will continue, although the uncertainty about how long this price difference will persist is another matter. According to official data, the total imports of clean products such as gasoline, diesel and kerosene reached 8.6 million tons in the first 11 months of 2006, while with the current growth rates and provided that the price difference is maintained, there should be 15-20 more handymax shipments in the market (not including time chartering). Spot market shipping rates take the cost of a ton to $41. Despite the market’s fluctuations, this is relatively low compared with the prices and total value of products shipped. In the last 12 months the cost for charterers ranged between $30 and $40 per ton. The cost of shipping gasoline and diesel has grown significantly in the last few months, with gasoline coming to $160 per ton and diesel to about $90/ton, mainly because of the change in the environmental regulations in the West Coast of North America. Since mid-October, US refineries have failed to respond to the increased demand for diesel with low sulfur, so prices have risen and demand is covered by Japan, where prices are relatively stable. Environmental rules are not going to loosen in the US; they will become stricter, with refineries unable to respond to demand and the market hoping that the Far East-West Coast route will continue for a while yet.