Hafnia sees tight gasoline, distillates drive product tanker recovery after H1 dip

Clean tanker company Hafnia sees low stocks of refined products as an opportunity for carriers in the months to come, following weakness in freight rates in the first half of the year.

There were significant drawdowns in 2025 in both clean products and crude inventories in OECD Europe and the Americas amid refinery closures, company management said Aug. 27 in material accompanying its H1 interim financial report.

This is good for product carriers. "Q3 represents a counter-cyclical recovery, driven by tight European gasoline and distillate supply, as a result of continued refinery closures," Hafnia said. "East to West distillate flows were countercyclically high in Q3...This will drive positive ton-miles into late Q3, early Q4," it added.

Diesel and gasoil stocks in the Amsterdam-Rotterdam-Antwerp hub were 2.032 million mt as of Aug. 21, 13% lower than they were a year ago, Insights Global data showed.

This may provide some upside to freight rates. Hafnia's Time Charter Equivalent for Medium Range tankers averaged $22,894/day in H1. It did not offer a year-over-year comparison, but its TCE income in H1 was $449.9 million, down 43% year over year.

Platts, part of S&P Global Energy, assessed the rate to carry a 37,000 mt cargo of refined products from the UK/Continent to the US Atlantic coast at an average of $23.18/mt in H1, down 22% year over year and below a five-year average of $25.44/mt.

The MR market remains volatile, with rates fluctuating based on new fixtures and overall demand dynamics, suggesting that while current conditions are beneficial, compared to earlier, charterers may seek to negotiate better rates by pushing loading dates, analysts at Energy said.

Mixed outlook for recovery

There are headwinds ahead for product demand; these come from disappointing demand data in the US and China, a downgraded assessment of implied Russian demand, and a downgraded chemicals demand outlook, according to analysts at Energy.

There has been recent product crack strength, but this has not been led by demand. While refined product consumption rose seasonally over the summer, year-on-year growth in 2025 remains limited, averaging just 300,000 b/d, with gains in jet and gasoline offset by declines in diesel and fuel oil, the analysts said.

On the other hand, low stocks do support the outlook for tankers. In the US, low diesel yields, strong exports and a drop in bio-distillate production have pushed distillate inventories to 20-year lows. In Europe, refining capacity shutdowns and resilient demand have maintained tight markets amid high geopolitical risk, the analysts said.

This comes amid a squeeze on tonnage; the recent EU sanction package on Russia has further tightened the tanker supply effectively, by potentially pushing more ships into the shadow fleet, Hafnia said.

By Q3 2025, a total of approximately 800 tankers have been sanctioned. The ban on products refined from Russian crude oil also contributes to market inefficiencies, expands trade routes, and increases ton-miles, the tanker company said.