An Alibra market research report suggest that shipping markets are dormant as of now and only an oil demand and trade need can bring life back once again.
ALIBRA Weekly Market Report:
It seems mediocrity is the new normal. World GDP growth this year is expected to remain at around 3.1% this year, the same as in 2015. Problematically for the shipping industry, world trade volumes are lagging behind and are projected to increase just 2.7% in 2016.
But next year may redress the balance. Research by the IMF suggests that oil prices could rise by around 16.4% in 2017, offsetting a possible 15.5% decline this year. This sudden growth would help world trade volumes grow by 3.9% in 2017, the IMF said, and could boost world GDP growth to 3.4% in 2017, giving a better macro picture for shipping. But for now, the S&P market is pretty dead (because the charter markets are also slightly lifeless). S&P transactions for tankers have almost halved so far this year (Jan 1-Sept 2). This year, Alibra has tracked 191 tankers changing hands, compared to 303 at this point last year.
Some 15 VLCCs have been sold this year, compared to 42 during the 2015 period. This year, 4 VLCCs have been sold as resales compared to 20 this time last year.
The tragedy of the S&P market really snaps into focus when we look at the average price at which resale VLCCs were sold: during the 2015 period, it was $98.9m per vessel. This year to date, the figure is just $84.25m.
At the other end, the average price at which a 15- year-old VLCC changed hands during the 2015 period was $32.23m – not too much above $31.47m, the average price at which 15-year-old VLCCs have been sold this year. This suggests buyers’ appetite for the older tankers remains firm, which is helping the vessels to maintain some of their value.
Ridgebury Tankers is one buyer that prefers older vessels. During 2015, the company bought four VLCCs aged 15+ years. At Posidonia this year, the company’s CEO stated that Ridgebury is still thinking of buying older tonnage, but any acquisitions would be made one by one.
“If you look at the driving miles so far in the US, India and China, it’s all surprised to the upside and I think that’s going to help tankers quite a bit over the next year or so and we have thought about buying some older tonnage,” Ridgebury’s CEO Bob Burke said at the event in June.
So prospective buyers of VLCCs can grab a bargain right now, in terms of brand-new vessels or older ladies. But the vessel sales figures would suggest that oil demand and trade need a jolt in order to kick-start shipping markets once more.
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Source: Alibra Shipping
