The huge surge in product tanker newbuilding orders since the second half of 2013 could spoil a recovery in the market warns Banchero Costa research head Ralph Leszczynski.

Speaking at the Mare Forum Indonesia conference in Jakarta last week Leszczynski said the market was now rebalancing after several years oversupply but the rash of orders over the last nine months.

On the demand side the product tanker market has on average seen volumes growing at around 5%. He said the market had seen healthy volume growth, increased distances and opportunities for triangulation. However, product tankers hit by and oversupply of newbuildings, which peaked at 18m dwt in deliveries in 2009.

Deliveries slowed to 6m dwt in 2013, and combining with strong scrapping volumes fleet growth was down to 1 – 2% a year. “We are finally rebalancing,

we are eating into the overcapacity,” he said.

Newbuildings in the period 2010 – 2012 were low with just 2 or 3 orders a month, but this all changed in the latter half of 2013. “Then things went completely crazy in the second half of last year with 50 tankers ordered in one month, which doesn’t really make much sense,” Leszczynski said.

Last year saw orders for 260 MR tankers and 56 LR2 tankers and the ordering trend continued into the first quarter of 2014.

“A sharp pick-up in orders is now possibly going to spoil the recovery, let’s hope this doesn’t continue like this,” he warned.