‘[W]e see the market being structurally short of diesel and marine gasoil and the refining industry will likely see a step change increase in refinery output to meet marine fuel demand,’ the company says.
The comment was made in Maersk Product Tankers’ (Maersk Tankers) annual results, published earlier this week, where the company reported a pre-tax loss of $35 million following a ‘financially challenging 2018’.
In its annual results, however, the company said it expects the market to improve from the end of 2019. Maersk Tankers noted that, on the demand side, trade is expected to increase sharply, driven by the 0.50% sulphur fuel regulation.
‘The regulations will require a major reconfiguration of the global refining infrastructure and logistics to meet blending demand for compliant marine fuels,’ the company said.
Maersk Tankers added that the sulphur cap could lead to the market becoming short of marine distillates which will result in a ‘step change’ increase in refinery output, which in turn could spur the tanker sector.
‘With this comes increased output of other fuels, which will need to be priced into the market, the clear majority of which will be carried by product tankers,’ said Maersk Tankers. ‘As a result, we see an upward trajectory in demand, starting from the end of 2019.’
The company also suggested that the trade impact from new sulphur regulations could ultimately benefit the full range of product tankers, as both intra- and interregional trade is stimulated.
‘The larger LR2s and MRs will benefit from growth of inter-regional trade from the Middle East to Europe and Asia, while the smaller Handy and Intermediates will benefit more from the intra-regional trade growth within Asia and Europe,’ said Maersk Tankers.
With transport of refined oil products making up around 9% of the world’s total seaborne transportation, Maersk Tankers said the onus was on the tanker industry to find solutions to the problems associated with climate change.
‘We are reducing the fleet’s CO2 emission levels through digital solutions, more efficient operation of vessels and fleet optimisation,’ said Maersk Tankers. ‘From 2010 to 2018, CO2 emissions were reduced by approximately 20%.’
This work, the company said, will continue, along with the testing of new fuel-efficient technology. Maersk Tankers highlighted its status as the world’s first product tanker company to begin testing wind-propulsion technology onboard a product tanker vessel, with the aim of achieving an average reduction of 7%-10% in fuel consumption and emissions.
Commenting, Maersk Tankers CEO, Christian M. Ingerslev, said: ‘Regulations limiting the sulphur content of marine fuel are also likely to add volatility to markets, generating earning opportunities. This leaves us optimistic that markets will improve gradually, with more sustainable improvements from the end of 2019.’