Declining market conditions for tankers, oil product carriers and LPG carriers and a worsening vessel supply-demand balance

「The chemical tanker market softened against a backdrop of uncertainty in the global economy arising from U.S. high-tariff policies and tensions in the Middle East. In addition, earnings declined from the previous fiscal year due to the one-time amortization of goodwill at an equity-method affiliate in the tank container business.」

「The product tanker market also saw temporary sharp spikes as tensions in the Middle East intensified. The continued embargo on Russian oil products and instability in the Middle East continued to support ton-miles, but the overall market softened somewhat year on year as lower refinery operating rates associated with the slowdown in the Chinese economy reduced production volumes and weighed on the market for China-origin cargoes. In the LPG tanker market, ton-miles increased as trade patterns became more complex due to tariff issues between the United States and China. However, transportation demand was absorbed by newbuild supply over the past 2 years, and the market also reflected a decline in cargo volumes due to weak arbitrage trading at the beginning of the year, resulting in a slight year-on-year softening. The chemical tanker market also softened year on year against a backdrop of uncertainty in the global economy arising from U.S. high-tariff policies and tensions in the Middle East.」

「The crude tanker market remained resilient at roughly the same level as in the previous fiscal year, as positive factors including limited newbuild supply and heightened geopolitical risks offset negative factors such as lower Chinese demand and OPEC+ production adjustments. In the chemical tanker market, ton-miles lengthened as many shipping companies chose routes via the Cape of Good Hope against a backdrop of tensions in the Middle East, and favorable market conditions continued. The LPG tanker market softened somewhat from the previous fiscal year as ton-miles declined following the easing of congestion in the Panama Canal.」

「The crude tanker market did not follow as strong an upward trend as expected, partly due to lower imports resulting from the slowdown in the Chinese economy. However, it remained at high levels year on year, despite the impact of geopolitical risks such as the situation in the Red Sea, amid longer ton-miles resulting from avoidance of Russian crude imports and continued growth in crude oil supply from non-OPEC+ countries such as the United States and Brazil. In the product tanker market, cargo movements were active as the United States and China increased oil product exports, among other factors, and ton-miles lengthened against a backdrop of avoidance of Russian crude imports and the Red Sea situation. With only limited newbuild vessel supply, the market remained at high levels. In the LPG tanker market, the price spread between U.S. and Middle Eastern LPG widened as industrial demand expanded in China and OPEC+ extended its production cuts. U.S.-origin cargoes remained firm, but the market softened somewhat as congestion in the Panama Canal eased from around August.」

「The product tanker, chemical tanker, LPG tanker and ammonia tanker markets also saw longer ton-miles as trade patterns changed following sanctions on Russia, with increased long-haul transportation from the United States, India and the Middle East to Europe. Tonnage supply and demand tightened further due to route changes amid the Red Sea situation, and the markets remained strong.」

「For crude tankers, OPEC+ production cuts dampened the increase in cargo movements during the winter demand season. However, stable transportation demand from the United States, supported by relatively low crude oil prices, enabled the market to maintain a certain level. For product tankers, cargo movements were active as the United States and China increased oil product exports, among other factors. At the same time, tonnage supply and demand tightened due to vessel delays caused by low water levels in the Panama Canal, and the market remained at high levels.」

「Crude tanker shipments remained sluggish due to OPEC+ production cuts, and loose supply and demand became the norm. The market also continued to trend downward as China's economic recovery slowed and the country worked to reduce its crude oil inventories. Product tanker cargo movements temporarily weakened due to scheduled maintenance at refineries in the Far East, but demand for oil products remained firm and the market stayed at high levels.」

「Although there were concerns about the impact of additional production cuts by OPEC+, cargo movements for crude tankers remained firm as China's economic activity resumed. Against a backdrop of longer ton-miles driven by the Russia-Ukraine conflict and U.S.-origin cargoes, as well as limited tonnage supply, freight markets fluctuated but remained at high levels year on year. The product tanker market was firm as exports increased ahead of scheduled maintenance at refineries in the Far East. However, export volumes declined as maintenance began and domestic demand rose with the recovery of economic activity in exporting countries, causing the market to gradually soften.」

「The crude tanker market remained difficult in the first half due to excess tonnage, but from summer onward, demand for tonnage increased and the market recovered, supported by longer ton-miles resulting from changes in trading patterns following the Russia-Ukraine crisis, higher winter crude oil demand and the release of the U.S. strategic petroleum reserve. The product tanker market also experienced periods of weakness as higher oil product prices and scheduled refinery maintenance reduced demand and supply. However, as in the crude tanker market, longer ton-miles resulting from changes in trading patterns against the backdrop of the Russia-Ukraine crisis supported the market, which remained at high levels.」

「The crude tanker market remained difficult in the first half due to excess tonnage, but from summer onward, demand for tonnage increased and the market recovered, supported by longer ton-miles resulting from changes in trading patterns following the Russia-Ukraine crisis, higher winter crude oil demand and the release of the U.S. strategic petroleum reserve. The product tanker market also experienced periods of weakness as higher oil product prices and scheduled refinery maintenance reduced demand and supply. However, as in the crude tanker market, longer ton-miles resulting from changes in trading patterns against the backdrop of the Russia-Ukraine crisis supported the market, which remained at high levels.」

「Although the crude tanker market remained difficult because of excess tonnage, it improved in the latter half of the first half as cargo volumes from the Middle East recovered and transportation cargoes increased following the release of the U.S. strategic petroleum reserve. In the product tanker market, the invasion of Ukraine by Russia led to shortages of oil products, particularly diesel, in Europe following import restrictions on Russian oil products. Cargo volumes from the United States, the Middle East and Asia increased significantly, substantially extending ton-miles, and the market remained at historically high levels in the first half.」

「For crude tankers, OPEC's coordinated production cuts were gradually eased as oil demand increased alongside the recovery of the global economy. Although cargo movements were recovering, the excess supply of tonnage had not been eliminated, and difficult market conditions continued. By contrast, the product tanker market remained strong, supported in part by longer ton-miles resulting from alternative sourcing of oil products previously supplied from Russia.」

「The crude tanker market remained difficult as the spread of COVID-19 and continued coordinated production cuts by OPEC+ hindered the recovery of crude cargo movements, compounded by an oversupply of tonnage. The product tanker market showed signs of recovery as economic activity temporarily resumed with the spread of vaccines, but favorable conditions did not last and the market became difficult as COVID-19 infections rose again.」

「The crude tanker market continued to operate below pre-COVID levels because of ongoing coordinated production cuts by OPEC+ and the prolonged slump in oil demand. In the product tanker market, the resumption of economic activity as vaccines became more widely available in Europe and the United States showed signs of improvement. However, the market became difficult from mid-August onward as successive major hurricanes made landfall on the U.S. Gulf Coast, reducing export cargo movements, and the scheduled refinery maintenance season in Japan and South Korea approached.」

「The crude tanker market faced exceptionally difficult conditions due to continued coordinated production cuts by OPEC+ and a prolonged slump in oil demand caused by COVID-19. The product tanker market also remained difficult, reflecting weak oil product demand amid the ongoing pandemic, scheduled refinery maintenance, and lower Chinese imports and exports following tax reforms affecting certain oil products in China.」

「The crude tanker market hit a record high in spring as lower crude oil prices increased demand for floating storage, but then remained in a downward trend as cargo movements failed to recover after storage demand subsided and coordinated production cuts continued.」

「The crude tanker market hit a record high in spring as lower crude oil prices increased demand for floating storage, but then remained in a downward trend as storage demand subsided and coordinated production cuts continued. Although there was a temporary recovery in December, the market remained generally weak from summer onward. Like the crude tanker market, the product tanker market hit a high in spring, then entered a downward trend toward summer as cargo movements stagnated due to lower refinery operating rates, and remained weak thereafter.」

「While the crude tanker market had remained weak in the same period of the previous year, it hit a record high in the first half as lower crude oil prices increased demand for floating storage. It then gradually softened as storage demand subsided and cargo volumes declined following an agreement to cut production, entering a downward trend toward summer. Like the crude tanker market, the product tanker market reached high levels in the first half, but entered a downward trend in the second half as sluggish cargo movements, caused by lower refinery operating rates amid a global surplus of oil products, weighed on the market.」

「The crude tanker market hit a record high in April as lower crude oil prices increased demand for floating storage. The market then plunged as demand declined following coordinated production cuts by oil-producing countries and spot cargo movements stagnated due to rising inventories, although it remained at relatively favorable levels. Like the crude tanker market, the product tanker market surged on increased demand for floating storage before gradually softening as economic activity stagnated due to the impact of COVID-19.」

「The crude tanker market remained generally weak in the first half due to lower crude oil demand in early spring and scheduled maintenance at refineries in the Far East. In the second half, the market remained firm following a rise driven by sudden spikes against a backdrop of conditions in the Middle East and tighter tonnage supply and demand resulting from sanctions on Chinese shipping companies.」

「The crude tanker market remained generally weak in the first half due to lower crude oil demand in early spring and scheduled maintenance at refineries in the Far East. In the third quarter, the market remained firm as the winter demand season began, despite a sudden market spike against a backdrop of heightened tensions in the Middle East and an intervening adjustment phase. The product tanker market remained constrained in the first half, with limited upside due to increased newbuild deliveries and scheduled refinery maintenance. In the third quarter, however, the market remained firm as tonnage supply and demand tightened in response to the rise in the crude tanker market and new refineries began operating in the Far East.」

「Although the crude tanker market saw sudden spikes due to deteriorating conditions around the Strait of Hormuz and attacks on oil facilities in Saudi Arabia, it remained generally weak because of lower crude oil demand in early spring and scheduled maintenance at refineries in the Far East. In the product tanker market, the first quarter remained subdued, with limited upside due to increased newbuild deliveries and scheduled refinery maintenance. Under these market conditions, the Tanker Division continued working to ensure the stable performance of long-term contracts and reliable contract renewals, while also improving operating efficiency and reducing costs through pool operations. As a result, the division as a whole reported a profit.」

「Although the crude tanker market saw a sudden spike due to deteriorating conditions around the Strait of Hormuz, an adjustment phase in tonnage supply and demand continued overall, reflecting lower crude oil demand in early spring and scheduled maintenance at refineries in the Far East. In the product tanker market, there were periods when cargo transportation from China increased sharply following the expansion of China's export quotas. However, the market continued to face limited upside due to the large number of newbuild deliveries and scheduled spring maintenance at refineries.」

「As a result of continued cost reductions, including improved operating efficiency through pool operations and the disposal of unprofitable vessels, the Tanker Division as a whole achieved higher earnings than in the previous fiscal year.」

「The crude tanker market, which remained weak in the first half due to seasonally lower transportation demand, shifted sharply in the third quarter and remained generally strong as the winter demand season began and crude oil exports from West Africa and North America increased as alternative sources for Iranian crude. The product tanker market also shifted from the generally weak conditions seen in the first half due to oversupply of tonnage and other factors. From late November onward, the market followed a recovery trend as the winter oil demand season began and tonnage supply and demand tightened after some large product tankers were redeployed to carry crude oil, heavy fuel oil and other cargoes. Under these market conditions, the Tanker Division continued working to ensure the stable performance of long-term contracts and reliable contract renewals, while also improving operating efficiency and reducing costs through pool operations. However, earnings deteriorated year on year.」

「Crude oil tanker rates remained generally weak despite occasional sharp spikes caused by typhoons and increased congestion in China, as well as tighter vessel supply and demand following the withdrawal of older vessels. Seasonal factors reduced transportation demand from spring through summer. LPG carrier rates declined in the first quarter as higher U.S. LPG prices narrowed the price gap with Asia and reduced vessel demand in the United States, but turned toward recovery in the second quarter after the price gap widened again, increasing vessel demand in the United States.」

「Crude oil tankers saw occasional sharp spikes due to typhoons and increased congestion in China, but vessel supply and demand remained generally in an adjustment phase as the Far East entered a seasonal lull in demand from early spring. LPG carrier rates generally declined as higher LPG prices in the United States narrowed the price gap with Asia, reducing vessel demand in the United States, while newbuilding deliveries added to the pressure. Oil product tanker rates moved toward recovery in April as longer voyages from the Far East to North America and Australia increased and tightened vessel supply and demand. From May onward, however, rates remained weak as arbitrage activity declined due to refinery maintenance and growing uncertainty over the outlook for crude oil prices.」

「Crude oil tanker rates failed to strengthen during the winter demand season and remained below the previous period's level for the full year, amid increased vessel supply, a perceived vessel surplus caused by the slow withdrawal of older vessels, and the effects of production cuts by OPEC members. Oil product tanker rates remained weak due to sluggish east-west cargo movements and increased newbuilding supply pressure, despite a temporary surge caused by a hurricane that hit the United States in summer. LPG carrier rates moved upward from autumn through winter and remained broadly at the same level as the previous period for the full year.」

「Crude oil tanker rates remained weak in the third quarter after a weak first half, as production cuts by OPEC members took effect and newbuildings were steadily delivered. An oversupply of vessels from the Middle East emerged, and rates remained low despite the winter demand season. Oil product tanker rates were temporarily elevated in the first half due to the impact of a hurricane that directly hit the United States, but remained weak because of sluggish east-west cargo movements and increased newbuilding supply pressure. In the third quarter, although the United States and Europe were hit by cold weather, the impact on winter market rates was limited, and rates remained weak as in the first half. LPG carrier rates reversed their downward trend from the first half, when arbitrage trades from the United States to Asia had halted as price differentials narrowed. Although rates fluctuated temporarily with changes in the supply-demand balance, the LPG carrier market moved onto an upward trend in the third quarter, mainly against a backdrop of steady LPG shipments from the United States.」

「Crude oil tanker rates remained low due to the effect of OPEC member production cuts, the onset of the spring and summer seasonal lull in demand, and the steady delivery of newbuildings. Oil product tanker rates remained weak, following the first quarter, due to sluggish east-west cargo movements and supply pressure from newbuildings, despite a temporary surge caused by a hurricane that directly hit the United States. LPG carrier rates recovered at times on the back of steady cargo movements, but subsequently turned downward after narrowing LPG price differentials halted arbitrage trades from the United States to Asia.」

「Crude oil tanker rates fell after a temporary tightening of vessel supply and demand, driven by increased cargoes from West Africa and longer tonne-miles, as the seasonal lull in demand began in spring and OPEC member production cuts took effect. Oil product tanker rates remained weak due to sluggish east-west cargo movements, refinery maintenance and supply pressure from newbuildings. LPG carrier rates remained low despite continued arbitrage trades from the United States to Asia and steady cargo movements from the Middle East to India, due to high vessel supply pressure.」

「Oil product tanker rates averaged below the previous period's level for the full year, weighed down by sluggish cargo movements for vegetable oils and other products, continued newbuilding deliveries, subdued east-west arbitrage activity, and deteriorating refinery margins amid a global surplus of oil product inventories. LPG carrier rates also remained weak compared with the previous period, due to increased supply pressure from newbuilding deliveries, restrained east-west arbitrage activity as regional LPG price differentials narrowed, and a decline in long-haul trades following the opening of the new Panama Canal route.」

「There were favorable developments, including the resumption of crude oil shipments from Nigeria as civil unrest subsided and the start of the winter demand season. Supported also by a rush in demand from European and U.S. charterers before the Christmas holidays, tighter vessel supply and demand led to a significant improvement in market conditions from early autumn. Oil product tanker rates remained weak throughout the period, weighed down by sluggish cargo movements for vegetable oils and other products, continued newbuilding deliveries, subdued east-west arbitrage activity, and deteriorating refinery margins amid a global surplus of oil product inventories. LPG carrier rates fell as the easing of the vessel supply-demand balance continued, due to increased supply pressure from newbuilding deliveries, restrained east-west arbitrage activity as regional LPG price differentials narrowed, and a decline in long-haul trades from the United States to Asia.」

「Crude oil tanker rates rose at times in the first quarter as tight supply and demand supported the market, but subsequently remained on a downward trend as cargo movements declined during the summer seasonal lull in crude oil demand. The completion of newbuildings continued while older vessels were slow to leave the fleet, further worsening vessel supply and demand, and crude oil shipments from Nigeria were suspended amid civil unrest. Oil product tanker rates weakened as cargo movements for vegetable oils and other products remained sluggish and newbuildings continued to enter service, while the expected east-west arbitrage activity was also subdued. LPG carrier rates fell as the easing of the vessel supply-demand balance continued, due in addition to reduced arbitrage activity from the United States amid weak LPG prices in Asia and increased supply pressure from newbuilding deliveries, as well as cancellations of cargoes loaded in the United States.」