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OVER THE WORST
IN ITS REVIEW of the tank storage market in 2020, storage broker Odin-RVB said that, while the volatility induced by the Covid-19 pandemic had both positive and negative effects on the oil, gas and petrochemical industries overall, most of those active in bulk liquids storage, whether as terminal operators or commodity traders, reported good or stable turnover for the year as a whole. This, it said, is a “good sign that the industries active in the tank storage market are resilient and will be there for the years to come”. The storage market for the year was set by the strong contango that emerged as
along the supply chain was looking for somewhere to be stored – and this included floating storage. Odin-RVB describes the situation like this: “As countries worldwide strongly advised all to work from home offices, cars idled in the streets and gasoline and diesel consumption collapsed leaving the majors with refineries no other option than to quickly adapt and try to shift production to products with the highest possible margins.” Even after the major oil exporting countries brought supplies into line with demand and prices began to recover, there was still plenty of oil in stock and the ongoing ‘super contango’
STEADY AS SHE GOES While the contango was most evident in the petroleum product markets, the chemicals sector faced some sharp shifts in the type of demand. For instance, Odin-RVB says, the most sought-after tankage was for the storage of ethanol, which was in short supply. In addition, there was significant growth in demand for capacity to store bio-feedstocks and, again, a limited supply of suitable tankage. Terminal operators have responded to those changes, with some new tankage coming onstream during 2020 and more expected this year, especially in the ARA region. This may result in some customers switching terminals, the broker forecasts, especially as some construction projects have been delayed by Covid-19 restrictions. Odin-RVB also mentions that the effects of the pandemic have made many players in the market aware of their dependability on and vulnerability to a single country, product or trade, prompting changes to business models and the reconsideration of planned investment. That has also come at a time
a result of falling oil prices after the sharp slump in demand for fuels in the February to April period made abundantly clear just how over-supplied the oil market already was. As traders and refiners jumped on the low prices, they met desultory downstream demand, meaning that a lot of product all
sent tank occupancy rates soaring. Odin-RVB reports that traders were looking for any tanks going, noting that diesel was being put into tanks designed for low-flash chemicals, and also that terminal operators have been able in some cases to lock in lease commitments at good rates over the longer term.
when the oncoming energy transition and the need for decarbonisation has also switching their focus towards sustainability and CO² emissions reduction. Odin-RVB expects that, absent a recurrence of last year’s strong contango, the market will become easier over this year, with more
MARKET • LAST YEAR WAS A STRANGE ONE FOR US ALL BUT TERMINAL OPERATORS, BY AND LARGE, DID REASONABLY WELL. THERE ARE SIGNS OF SOME RETURN TO NORMALITY
HCB MONTHLY | JANUARY 2021
