Hafnia hopes sanctions will deter clean tanker cannibals
BW Group company reported a 2.3% drop in profits for 2024
Tightening crude tanker supply because of increased sanctions will drive up dirty rates and deter ‘cannibalisation’ of clean rates, Hafnia believes
HAFNIA reported profits after tax of $774m last year, down 2.3% on the $793.3m it posted in 2023.
The first nine months of the year were characterised by strong earnings, the Singapore-based tanker giant said, but the fourth quarter of 2024 saw the sector come under pressure as a result of refinery maintenance and so-called “cannibalisation” of the clean sector from crude tankers.
But Hafnia is hoping that sanctions on vessels at the start of 2025 will boost dirty rates and in turn relieve pressure on the clean sector.
The BW Group company highlighted recent moves from India and China to reject sanctioned tankers. China’s Shandong Port Group banned US-sanctioned tankers in early January 2025 and New Delhi warned designated vessels would no longer be allowed to discharge their cargo after March 12.
Hafnia said it had already seen declining import volumes from Russia, Iran and Venezuela into Chinese and Indian markets and expected replacing this lost volume would require capacity equivalent to 100 suezmaxes.
Chief executive Mikael Skov said the company had “noticed a decline in tonne-miles in the sanctioned fleet since, and we expect this to decrease further in the coming months”.
“This will increase the utilisation and tonne-mile impact for existing crude tankers, which will result in a significant reduction in cannibalisation in the clean market.”
While the clean market did recover after the dip in early 4Q24, the recovery was muted by subdued market sentiment, limited cross-hemisphere trade and shorter voyage lengths, Skov said.
“Laden voyage lengths dropped by approximately 12%, mainly as a result of increased refinery output from the US Gulf, which has largely replaced Middle East output for European demand,” he said.
Hafnia’s outlook remains optimistic though, with a growing number of tankers older than 20 years becoming potential scrapping candidates and a therefore “manageable” supply balance in the coming years.
The usual geopolitical caveats remain. A return to the Red Sea would, naturally, bring capacity back into the market. But Hafnia said it expected a more limited impact of any return now though, as a result of reduced cross-hemisphere trade.
The net impact of a Suez Canal reopening would be the equivalent of 10 medium-range vessels re-entering the market, the tanker giant said.
