30 Mar 2022 | 16:19 UTC

Hafnia expects higher 2022 product tanker volumes on rising refinery runs

Highlights

Lost refining capacity mainly from US, Europe, Asia: IEA

Replacement volumes to come from Middle East

Oil product tanker company Hafnia projected transported volumes to grow 6% on the year in 2022 on the back of growing refinery run rates, the company said March 30 in its 2021 full year report.

The International Energy Agency expected global refinery intake to rise by 2.9 million b/d this year to 80.8 million b/d, or 860,000 b/d less than its previous estimate.

The growth of refining capacity in 2022 has dimmed following Russia's invasion of Ukraine, the IEA said March 16.

Higher refined product volumes may be take some months to materialize. Most new capacity projected for 2022 will not come online until the second half of the year, while high natural gas prices in Europe dragged on real earnings for refiners, the IEA said.

Hafnia also expected the second half of 2022 to present more upside because of the phased easing of OPEC+ cuts, as well as the trimming of the current tonnage oversupply.

In a bullish development for product tankers, refinery closures in Europe and Australasia were expected to drive growth for imports by 11% and 24%, respectively, with longer-haul exports from the Middle East expected to provide much of the product, Hafnia said.

The IEA said in February it estimated 2.8 million b/d of lost refining capacity in 2020-2021, mostly from operating refineries in the US, Europe and Asia, rather than from long-term underutilized assets.

Competition for shipping clean products may come from crude tankers on their maiden voyages as they look for employment amid a weak dirty tanker market, Hafnia said.

The product tanker fleet looks like it will shrink, Hafnia said. The orderbook of product tankers over 10,000 dwt stood at 5.3% of the fleet, its lowest in over 26 years, and this pointed to decreasing supply of tonnage in the fleet.

The shrinking fleet supply could be exacerbated by the International Maritime Organization's energy efficiency regulations that are to come into effect in 2023, which will encourage scrapping and slower speeds, Hafnia said.