Product tanker equities: The road ahead
The product tanker shipping market has been volatile since April 2020 with rising Covid cases in several countries. Average product tanker earnings jumped by 97% MoM in April 2020 with average MR TCE rates surpassing USD 60,000pd and average LR2 spot TCE rates on TC1 Route (Ras Tanura-Yokohama) at USD 102,300pd. The supply-demand dynamics of product tankers changed dramatically in the following months as key crude oil producers and refineries adjusted their output and operations to prevent any further supply glut which also facilitated inventory drawdown in 2H20. Accordingly, spot TCE earnings were on a sharp decline across vessel classes in 2H20 and average product tanker earnings slumped by 85% between April and December 2020. MR TCE rates averaged USD 12,300pd and LR2 rates on TC1 averaged USD 11,400pd in December 2020.Similarly, product tanker shipping stocks oscillated wildly in the first four months of 2020 marked by the initial decline, but thereafter posted gains in April 2020. However, capital gains in the initial months of the pandemic were not sustainable and stock prices soon declined to 52-week lows in 4Q20 – generally considered a seasonally strong period for the sector.
Drewry, since 1970, has been providing research and advisory services on the global Maritime and Shipping industries and has established itself as a firm with long history of credibility and expertise on various aspects of the maritime industry. Leveraging this in-depth market knowledge and understanding, we have extended our offering to deliver a unique, independent investment research service on globally listed companies operating in the maritime industry. Under the brand Drewry Maritime Equity Research and in accordance with the FCA, DMER led by Rahul Kapoor and his team, offers fundamental analysis on listed companies. DMER analysts have access to one of the most up-to-date, comprehensive and reliable sources of market insight and research data available today. By combining these market-leading resources with seasoned sector expertise and commercial awareness, we are able to offer a highly differentiated and comprehensive investment research service to prospective investors in listed maritime companies. We look at globally listed companies within the following sectors: Port Operators, Container Shipping, Container Manufacturing & Leasing, LNG Shipping, Dry Bulk Shipping and Tanker Shipping. Combine in-depth sector expertise with financial analysis focusing on over 50 stocks globally.
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