Add oil shippers to the list of winners from this year’s collapse in crude.
The price plunge has spurred China, the world’s second-biggest importer after the U.S., to accelerate bookings of oil cargoes. It will also shave almost $20 billion a year in fuel costs across the maritime industry if prices that dropped 18 percent since last November hold around current levels, according to data compiled by Bloomberg.
While the oil slide is hurting nations from Saudi Arabia to Iran that depend on energy for revenues, companies including airlines and cement makers are benefiting as their fuel costs decline. Ship owners serving the industry’s benchmark Middle East-to-Asia trade routes are reaping the best returns from charters in years as the slump drives down the industry’s single biggest expense.
The number of supertankers sailing toward China’s ports matched a record on Oct. 17 and is still close to that level now. The country added 35 million barrels to its inventories in the past three months as the nation fills its strategic petroleum reserves, OPEC said yesterday.
“The Chinese, among others, seem to be responding to the lower oil price with additional demand,” Paddy Rodgers, the chief executive officer of Euronav NV (EURN), an Antwerp-based owner whose fleet is part of the world’s largest pool of tankers, said by e-mail Nov. 10.
Oil companies booked ships to load 148 million tons of Persian Gulf crudes in the 12 weeks since Brent fell below $100 a barrel. The orders are up 5 percent from a year earlier, according to lists of charters compiled by Bloomberg.
The shipping industry consumes as much as 3.5 million barrels a day in fuel, according to Trafigura Beheer BV, an oil trader. Prices averaged about $73 a barrel on Nov. 11, about $15 a barrel less than a year earlier, according to data compiled by Bloomberg. The year-on-year slump amounts to annualized savings of $19 billion.
The price slump will curb investment in higher-cost production projects and drive a rebound in the second half of next year, Abdalla El-Badri, OPEC’s secretary-general, said in Vienna on Nov. 6.
Shipping isn’t the only industry benefiting from cheaper oil. American Airlines and United Airlines both said they beat quarterly estimates last month with a boost from higher fares and falling fuel costs. Bernd Scheifele, the chief executive officer of HeidelbergCement AG, the world’s third-biggest cement-maker, said on a Nov. 6 conference call that each $0.10 cut in the gasoline price represents $12 million in savings for the company.
At a time when China’s economy is growing at the slowest pace in decades, its oil imports are rallying. The world’s second biggest economy purchased 25.5 million metric tons a month in the January-to-September period, heading for a record year. Falling prices may add to those figures as winter approaches.
“The main traders, they are typically more active in the tanker market when prices have dropped,” said Moerkedal of RS Platou Markets. “When you look at chartering in the last couple of weeks China has definitely been one of the most active buyers of oil.”
Source: Bloomberg
