Among the different types of tankers, oiltankers have a large portion of tanker cargoes due to large quantities. Fromoil tankers, about 80% of the demand for crude oil tankers while rest of 20%are from product tankers. Concentration of world’s oil production andconsumption in different parts of the world has emerged a persistent demand foroil tankers.The World Economy- Economic growth and industrial activity are highly affect for product tankerindustry. Developing economies such as Brazil, Russia, India, and China lead toeconomic growth there by growth in GDP which directly affects merchandisetrading and seaborne shipments, so that product tankers.The shalerevolution make room for USA to emerge as a global crude oil exporter. This leadsto exporters from West Asia and West Africa to divert from North Americatowards Asia new ton-miles for crude tankers.
According to Pilavakis (2016), demandfor refined petroleum products could continue to grow with increasing industrializationin advance as well as developing economies.Economic structure– industrial activities and the processing of raw materials aretaking place in the countries producingthese resources. The oil refinery facilities have been built in crude oil producing countries. As a consequence,demand for total seaborne trade becomeshigher in value and lower in volume. This increases the demand for refined products,so that product tankers. But the drop in the OECD(Organization for Economic Co-operation) output was offset by increasedproduction in developing countries such as China and India. Instead of importing refined products, crude oil is imported and refinedin their refineries which leads to a dramatic decrease of demand for producttankers in those countries. Also, increase ofoil price by major export countries leads to look for substitutions such ascoal and nuclear energy.
As a consequence, structural changes in the European industriesleads to almost 40% reduction of crude oil in between 1990 and 2010 and inJapan, oil imports were reduced by 16% between 1980 and 1990 offset by importsof coal. These factors negatively affect for the demand of product tankers. Seasonal Cycles -Kwak (2012) shows how tanker shipping is affected by seasonality in wayssimilar to a consumption patterns.
Summers are bear markets and winters arebull markets. During summers, plants including refineries undergo maintenanceactivities and Winter months are about consumption and restocking of supplies.The pattern is similar across tanker shipping companies due to decline ofearnings by 30% to 50% due to idling or overcapacity during the summer months.