Contrasts In The Tanker Industry: Demolition Plummets, Contracting Surges

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The tanker industry is currently experiencing contrasting trends in demolition and contracting activities, reflecting strategic shifts influenced by market dynamics and regulatory expectations.

Tanker Demolition Plummeting

Tanker demolition rates have reached unprecedented lows in 2024, with only 2 tankers scrapped so far. The trend is set against a backdrop of aging fleets and anticipated tightening of global maritime emissions regulations, necessitating future waves of scrapping to manage fleet age and compliance costs.

Highs in Tanker Earnings

Average earnings for crude and product tankers have surged to multi-year highs, despite historically low demolition rates. The phenomenon, driven partly by the removal of older vessels through dark fleet operations, suggests a delayed impact of environmental compliance costs on fleet renewal.

Surge in Tanker Contracting

After years of underperformance, tanker contracting has surged in 2024, significantly outpacing annual deliveries. This spike, totaling 175 firm orders in the first five months alone, marks a substantial increase from previous years and is expected to influence newbuild pricing dynamics, particularly with Chinese shipyards dominating new orders.

The tanker industry faces a pivotal period characterized by subdued demolition rates, soaring earnings, and robust contracting activity. Future developments hinge on the interplay between regulatory pressures, market conditions, and strategic decisions impacting fleet composition and operational efficiencies.

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Source: BRS