According to Shipowning body BIMCO, An upsurge in freight rates and demand has seen product tanker orders in the first half of this year already surpass last year’s total newbuild contracting, reaching 8.9m dwt by June.
Following a period of extremely strong vessel earnings and asset valuations, an unwinding of the support that created the earnings boom has seen spot and time charter rates fall from their highs, though still remain at elevated levels. This bifurcation of the market has seen owners tempted back to the shipyards with ordering picking up steadily from Q1 and into Q2, said UK consultants Maritime strategies international (MSI).
New Build Contracting Activity
According to MSI, newbuild contracting activity at the start of 2023 was initially subdued due to high slot costs and long lead times at shipyards with just four tankers contracted in the first two months of this year. But, since then, there has been a notable uptick in contracting activity.
BIMCO’s analysis
BIMCO’s analysis showed the product tanker orderbook to fleet ratio has increased from 5.4% last December to 9.3% in June 2023, driven by a 337% year-on-year rise in contracting during the first half of this year.
MR and LR1
Although the contracting of MR and LR1 tankers surged significantly, it was the LR2s that increased the most. So far this year, 5.6m dwt of LR2s have been booked for construction, bringing the orderbook to 21.6% of the present LR2 fleet.
“The product tanker fleet has been gradually ageing over the past ten years, and the average ship is now nearly 13 years old. The increase in contracting will help the sector address the increased market demand and could help rejuvenate the fleet,” said Filipe Gouveia, shipping analyst at BIMCO.
The ships ordered this year will mostly deliver in 2025 and 2026 and until then, BIMCO suggested supply growth should be limited, with rates influenced mainly through demand factors.
“The impressive pick-up in contracting this year could however begin to slow down in the medium term. The International Energy Agency estimates that oil demand could peak already in 2028, which would limit further fleet growth. As such, new contracting may focus on replacing the aging fleet and on reducing greenhouse gas emissions,” added Gouveia.
Italian broker Banchero Costa counts 3,362 trading units in the coated product tanker fleet ranging between 30,000 and 119,000 dwt, of which over 50% MR2s. Deliveries of these ships most recently peaked in 2019 with 153 units at nearly 9.8m dwt. The Genoa-based firm expects about 69 units or 4.69m dwt to deliver this year.
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Source : splash247
