Hafnia is one of the world's largest product tanker companies — operating Medium Range (MR), Long Range 1 (LR1) and Long Range 2 (LR2) tankers that transport refined petroleum products like gasoline, diesel, jet fuel and naphtha from refineries to consuming markets. The VLCC spot rate signal, while measuring crude tanker rates, serves as a reliable proxy for the broader tanker market cycle that drives Hafnia's earnings.
Why the VLCC Signal Applies to Product Tankers
Product tanker rates and crude tanker rates are not identical — they reflect different supply chains (refined products vs. crude oil). However, the VLCC signal captures the broad tanker market cycle effectively because the underlying supply and demand dynamics (fleet growth, oil trade volumes, refinery utilisation) affect both crude and product tankers simultaneously.
Product tankers benefited particularly strongly from the post-2022 disruption to European energy flows — Russia's invasion of Ukraine redirected significant refined product flows, creating a structural tonne-mile increase that extended the Hafnia cycle well beyond what pure VLCC dynamics would have predicted.
The 2020–2024 Cycle: +46% in 51 Months
VLCC rates reached their lowest sustainable levels in September 2020 following the post-COVID-storage-spike collapse. Hafnia — which had only recently listed on Oslo Børs — fell to NOK 30.8. The subsequent recovery was driven by the Russian refined product trade disruption (European countries replaced Russian diesel with long-haul imports from the Middle East, US and Asia), creating an extended period of high product tanker demand. Hafnia reached NOK 45.0 by December 2024 — a gain of 46% in 51 months.
Hafnia vs. Frontline
Hafnia's more modest return (+46%) compared to Frontline (+139%) reflects both the shorter cycle duration and the fact that product tankers are less volatile than crude tankers — MR tankers have lower day-rate swings than VLCCs due to their more diverse cargo base and customer mix.
Key Risks
Hafnia's main risks are fleet oversupply (a wave of new product tanker orders was placed in 2022–2023 and deliveries begin in 2024–2025), the normalisation of Russian refined product trade flows, and the long-term energy transition reducing refined petroleum product demand. Hafnia's limited post-IPO cycle history means the VLCC signal has fewer historical calibration points for this specific stock.
Cycle Performance Summary
| Parameter | Value |
|---|---|
| Exchange | Oslo Børs |
| Buy date | September 2020 |
| Buy price | NOK 30.8 |
| Sell date | December 2024 |
| Sell price | NOK 45.0 |
| Return | +46% |
| Duration | 51 months |
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