State of Handysize Tanker: Future Outlook, TC Averages, Earnings, and Market Trends

This report provides an overview of the state of Handysize Tankers, including their future outlook, TC averages, earnings, and market trends. It discusses the supply-demand balance, demolitions, and trade growth, as well as the Handymax and Supramax orderbook to fleet ratio and the seasonal TC averages. The report concludes that the balance in supply-demand is improving on a continuous basis, even as demolitions have slowed down and deliveries remain at a relatively stable position.

PART 1
A REPORT ON THE STATE OF HANDYSIZE TANKER
Report:
Handysize Tankers refer to small dry bulk
carriers or oil tankers with a capacity of around
30,000 DWT and 60,000 DWT, but there is no
fixed boundary to this definition. The most
typical handysize tankers that is made these
days are of the sizes 32,000 DWT with a draught
of 33ft. They have a capacity to hold five cargo
and four cranes which are on-deck for handling
the cargo. Some of these handysize tankers are
also equipped with crutches to load the wooden
logs easily on the deck. This category of tankers
include Handymax and Supramax.
The future outlook of Handymax and Supramax
seems to be favorable as the year changes from
2018 to 2019. Although there have been ups
and downs in the past year, the recent research
says that there is an expectation of 5.655 units
of trading fleet which is equivalent to 257.9
million dwt. Considering delivery slippages,
there is an expectation of 7-8 million dwt. The
Handymax and Supramax orderbook to fleet
ratio is 6.4% in terms of unit and 7.3% in terms
of dwt currently.
The TC averages of Handymax and Supramax
have recovered compared to the situation in
2016. It is now averaging around 11500
USD/day and 8600 USD/day respectively.
Deliveries in 2018 fell to around 8 million dwt
from 12.8 million dwt in 2017 after a 30%
slippage in delivery. In 2018, 130 units of
delivery was recorded for 6.4 million dwt which
is a fall of about 48% in terms of dwt compared
to 2017. However, knocking down of vessels
have slowed down towards the end of 2018
with only 18 vessels reported to be scrapped
which amounts to 0.7 million dwt which is a fall
in about 84% in dwt terms compared to 2017.
jan feb mar apr may jun jul aug sep oct nov dec
0
2000
4000
6000
8000
10000
12000
14000
TC AVERAGE- SEASONALITY
(SOURCE: THE BALTIC
EXCHANGE; DAILY DATA;
USD/DAY)
SUPRAMAX HANDYMAX
Tanker owners had faced with a mixed response
in the freight rate market, as there have been
high rates, as well as low rates throughout the
year 2018. Thus it is alright to say it was a year
of extremes. It was quite a bouncy year for the
tanker earning, as US-Saudi politics and Chinese
trading scenario created a temporary recovery
for the tanker market. Earnings for tankers
followed suit, with having a very high peak in
December 2018.

In July 2018, the earning started rising. But for a
very short period till September. After which,
the earnings started falling drastically. The
lowest earning for the handysize tankers were
in October 2018. Since then, the earning is on a
slow and steady rise as it reaches its peak in
December 2018. This was again followed by a
fall as the shipping industry entered into the
New Year. In January 2019, the earning started
falling again.
Jul-18 Aug-18 Oct-18 Nov-18 Jan-19
0
2000
4000
6000
8000
10000
12000
14000
16000
18000
20000 TANKER EARNING
US $ PER DAY
To conclude it can be said that the balance in
supply-demand is improving on a continuous
basis even as the demolitions have slowed
down, even at lower levels the deliveries remain
at a relatively stable position, and trade growth
generally still continue even at a decent levels.
References:
1. Mediterranean Handysize clean tanker
rates plummet amid tonnage
oversupply | Shipping Herald. (2019).
Retrieved from
http://www.shippingherald.com/medit
erranean-handysize-clean-tanker-rates-
plummet-amid-tonnage-oversupply/
2. Tanker. (2019). Retrieved from
http://www.aspships.com/Tanker/tank
er
3. Tanker Market in 2019: Will it be
Another Rollercoaster Ride? | Hellenic
Shipping News Worldwide. (2019).
Retrieved from
https://www.hellenicshippingnews.com
/tanker-market-in-2019-will-it-be-
another-rollercoaster-ride/
4. Tanker Market Rates 18/02/2019 |
Hellenic Shipping News Worldwide.
(2019). Retrieved from
https://www.hellenicshippingnews.com
/tanker-market-rates-18-02-2019/