China logjam, stubborn storage buoy tanker rates
Good news for tanker rates: Port congestion is on the rise and even though floating storage is off its peak, theres a long, long way to go before all those cargoes are unloaded. On the tanker-supply side of the equation, surging congestion in China is offsetting declines in floating storage.
The more the global tanker fleet suffers supply chain logjams and storage cargoes remain on board, the less ships are available for spot deals. Thats a plus for spot rates. The caveat is that demand for fresh voyages will fall as stuck tankers are finally unstuck.
The International Energy Agency (IEA) released new floating storage numbers on Friday, citing data from shipbroker EA Gibson showing an all-time high of 211.3 million barrels of short-term storage in May, falling by 34.9 million barrels in June.
At first blush, this implies a fast unwinding of floating storage. But there is intentional storage, where traders look to buy low and sell high, and there is unintentional storage, where tankers cant unload due to congestion.
When it comes to supply-demand fundamentals, all that matters is that ships are tied up. It doesnt matter why. And despite the evaporation of floating-storage economics, an inordinate number of tankers are getting tied up.
For further insight, FreightWaves obtained the latest data on floating storage and congestion from VesselsValue and Kpler.
Crude and products diverge
VesselsValue is a U.K.-based company specializing in asset valuations and ship-movement data and analys....