Friday, September 26, 2014

Interest switches to VLCCs

Aries Star vela VLCC

This year the foot has come off the accelerator in terms of MR ordering with the emphasis shifting very much to the crude carrier newbuildings.
Thus far, 2014 has been a much more rewarding year for owners than last year with positive spikes seen in the spot market and a definite shift in sentiment, with reasonable expectations for the second half of the year, Gibson Research said in a recent report

However, as of last week, the signs are not quite so positive, as oil demand declined and the price with it.

Some 31 VLCCs have been ordered this year and the vast majority were placed by well-known players. Despite the previous concerns about the Chinese ordering extensively in this sector, we can only attribute one vessel directly to Chinese interests, Gibson said.

DHT Holdings, who are publicly quoted on the NYSE, figure strongly with six vessels on order at Hyundai, which added to their recently acquired Samco tonnage of seven vessels, will take them to a total VLCC fleet of 20.

Capital Ship Management has ordered two, taking the VLCC fleet to six. Eastmed has ordered two, which will take this fleet to eight and Maran Tankers has contracted four, increasing the company’s portfolio to 28, which part of a wider fleet renewal programme.

In addition, Metrostar’s orders total six, having booked a further two this year, while Genmar has added two newbuildings in addition to a single order placed last year, taking its total to 10.

Navig8, who appear to do nothing by halves in any of the sectors that the company is  involved in, has ordered six newbuildings, adding to the previously ordered eight, which will take the company’s total number of new ships to 14 (plus three pool units) eventually taking their VLCC fleet to 17. 

Private equity player Wilbur Ross’ Transportation Recovery Fund has teamed up with Anders Wilhelmsen to order two ships each. 

It is interesting to see how many experienced VLCC operators have chosen to make a move this year and it is worth noting that prices recently firmed to around $98 mill per vessel, compared to a low point in the first half of 2013 at around $90 mill, Gibson said.

While this is a review about newbuilding orders, it would be amiss not to mention Euronav’s fleet expansion of some 19 secondhand VLCCs over the course of 2014. 

With just 6% of the current VLCC fleet over 15 years of age, it appears that there is limited scope for some fleet replacement with modern eco units being the order of the day.

This year, around 28 VLCC deliveries are scheduled for delivery, which then drops to eight in 2015 before picking up in 2016 to number 48.

Provided the Chinese keep their hands in their pockets this would seem to be a containable level of replacement in this sector, which may not be so true in others, Gibson concluded.

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