The emergence of private equity and hedge funds in shipping over the past 18 months, has led to a resurgence of new building orders, as financing availability grew exponentially. However, this year, the trend has mainly focused on the crude tanker segment, as opposed to last year’s preference towards MR product tankers which led the way.
According to the latest weekly report from shipbroker Gibson, this year has been the one “where the foot has come off the accelerator in terms of MR ordering with the emphasis, in terms of ordering, shifting very much to the crude sector.
Gibson noted that “2014 had been a much more rewarding year for owners than 2013 with positive spikes seen in the spot market and a definite shift in sentiment, with reasonable expectations for the second half of the year. However as of today the signs are not quite so positive as oil demand declines and the price with it, but there is still time for plenty of surprises before the end of this year”.
According to the figures that the shipbroker quoted, “31 VLCCs have been ordered this year and the vast majority are to well-known players. Despite all the previous concerns about the Chinese ordering extensively in this sector we can only attribute 1 vessel directly to Chinese interests. DHT Holdings Inc. who are publicly quoted on the NYSE, figure strongly with a total of 6 vessels on order at Hyundai which added to their recently acquired Samco tonnage of 7 vessels, will take them to a total VLCC fleet of 20. Capital Ship Management have ordered 2 taking their fleet to 6, Eastmed 2 which will take their fleet to 8 and Maran Tankers 4 increasing their portfolio to 28, part of a wider fleet renewal programme. Metrostar orders total 6, having booked a further 2 newbuildings, while Genmar have added 2 newbuildings in addition to a single order placed last year, taking their total to 10. Navig8 who do nothing by halves in any of the sectors they are involved in, have ordered 6 newbuildings adding to their previously ordered 8, which will take their total number of new ships to 14 (+3 pool units) eventually taking their VLCC fleet to 17. In our Private Equity report we mentioned that Wilbur Ross’s Transportation Recovery Fund have teamed up with Anders Wilhelmsen and have 2 ships each”.
Gibson added that “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 million, compared to a low point in the first half of 2013 at around $90 million. Whilst this is a review about newbuilding orders, it would be amiss not to mention the fleet expansion of Euronav by some 19 second-hand 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 we have around 28 scheduled VLCCs deliveries which then drop to 8 in 2015 before picking up in 2016 to 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”, the London-based shipbroker concluded.