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How Far Will Trump Go To Save U.S. Shale?

How Far Will Trump Go To Save U.S. Shale?

Washington is increasingly worried that…

Tanker Rates Rise to Four Year High, as Demand for Naphtha Increases

Tanker Rates Rise to Four Year High, as Demand for Naphtha Increases

Rising demand from Asia for naphtha, a product refined from crude oil and essential for the production of most types of plastic, along with a shortage in the number of ships actually able to transport the product has led, and will continue to lead, to an increase in rates for tankers.

Rates for tankers carrying naphtha had been declining for a while, especially after the disaster at Fukushima which saw much of Japan’s manufacturing industry close down and daily rates hit a low of $1,516. Ship owners started carrying crude oil and other ‘dirty’ cargoes which offered a larger profit.

Demand in Japan has now picked up again as the manufacturing has increased again, and demand for naphtha imports has grown every month. However due to the fact that many ships converted to carry crude oil, there is a shortage for the shipping of naphtha.

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Around 44 tankers were switched to take oil and other dirty cargoes since 2011, but the problem is that in order to revert back to naphtha, the ships tanks must be cleaned out and decontaminated.

Analysts at Bloomberg have no estimated that the lack of tankers compared to demand for their services will see daily rates hit $16,250 in 2013, 52% more than this year.

Robert Bugbee, the president of Scorpio Tankers, one of the shipping companies expecting to benefit from increased rates, said that, “demand is stronger than it has been for years. We have seen the fundamental trend for tanker rates to Asia shift for the better. The market for naphtha is exceeding our expectations, and so we are much more optimistic.”

By. Joao Peixe of Oilprice.com



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