In the past decade, the map of tanker demand has changed considerably. China's transition from relative minnow to major economic power has been the gift that keeps on giving for tanker owners, turning the tanker sector on its head. Rise of the Chinese Between 2002 and 2012, Chinese seaborne crude imports increased by 275%. China’s refinery capacity has expanded by 104% in the same period, as China looked to  domestically service its rapidly growing demand for oil products. Consequently, crude tanker dwt demand from Chinese crude imports has increased on average by 15% per year in the last ten years, as shown by the Graph of the Month. Furthermore, the proportion of global crude tanker dwt demand driven by Chinese imports has grown from 11% in 2002 to 22% in 2012. VLCCs, which largely service Chinese crude imports from the Middle East Gulf (MEG) and West Africa have benefitted particularly from this surge. VLCC demand from Chinese imports has increased by 19% per year on average between 2002 and 2012, making up 28% of total VLCC demand in 2012, compared to 6% in 2002. Despite fears of a slowdown in growth, Chinese seaborne crude imports are projected to rapidly increase in 2013, further boosting dwt demand.
Sun Sets in the West
By contrast, demand from North American crude imports has been trending downwards in the last decade. Traditionally, the US has been a key driver of dwt demand, a result of the US being the world’s largest importer of crude and because of the substantial distance between the US and the MEG. However, a number of factors have altered this scenario. Firstly, US oil demand has declined by 11% between 2007 and 2012. The weak under-lying economic situation has been coupled with a broad structural decline in oil demand. Secondly, crude production in the US and Canada has increased by 19% between 2007 and 2012, reducing demand for seaborne crude imports. Finally, the share of US seaborne imports sourced from the MEG has fallen from a high of 36% in 2001 to a projected 30% in 2012, reducing the average distance travelled by tankers to the US, dampening dwt demand.
Dragon Takes Pole Position
The share of demand from Chinese imports is projected to overtake that from North America in 2013, despite the US remaining the largest seaborne crude importer (6.1m bpd projected). A crucial reason for this is that the long-haul share of imports to China has increased from 82% in 2003 to 92% in 2012. In particular, imports from Central and South America have grown from 1% of Chinese seaborne imports in 2003 to 10% in 2012.
Ultimately, deadweight demand from Chinese crude imports is likely to continue to increase in the medium-term. The IEA project China's oil demand will increase by 19% between 2012 and 2017. By contrast, US oil demand is projected to remain flat in the same period, with the share of demand serviced by domestic production set to increase. However, Chinese crude demand growth should offset losses incurred from declining US demand, leading to a continuation in the trend of shifting global tanker demand.























Source: Clarkson Research Services