| VLCC newbuilding orders relatively quiet |
| Despite a contango in the oil market resulting in an improvement in fleet rates, newbuilding orders have been relatively low, according to tanker brokerage and consultancy Poten & Partners. IHS Maritime’s Sea-web.com data show that there are 89 very large crude carriers (VLCCs) on order, including 10 VLCCs that were ordered this year. Poten & Partners commented, “It is remarkable that the orderbook has not grown more as freight rates have been fairly healthy, especially in recent months and because newbuilding prices have remained under pressure, as demand from some other sectors, such as dry bulk and offshore, has vanished. Second-hand prices, which are more immediately influenced by freight markets, on the other hand, have increased in recent months.” Current VLCC spot rates over USD50,000 per day, compared with the 2014 average of USD30,469. Intermodal Shipbrokers assessed the price of a five-year-old VLCC at USD80.6 million, up from the 2014 average of USD73.6 million. Intermodal Shipbrokers noted that there has not really been a rush for VLCC orders. “Freshly inked newbuilding orders are still scarce and a big part of today’s activity is being sourced from past activity,” said the Greek shipbroker, alluding to Sinokor Merchant Marine’s recent decision to convert two LNG carrier orders at Daewoo Shipbuilding & Marine Engineering to four VLCCs. Fleet growth was limited in 2014 as VLCCs ordered prior to the 2008 global financial crisis were mostly delivered or cancelled before last year. Contracting was also limited as the financial turmoil and market uncertainty kept owners away from the shipyards. Growing demand with limited fleet growth resulted in a tightening supply-and-demand balance and improving freight rates. Poten & Partners said, “The outlook for the tanker market remains favourable over the next few years. The longer-term picture is highly dependent on developments around oil production and refinery growth, but so far the owners have helped their case by not rushing to the shipyards." |