VLCC Newbuild Orders Will Require A ‘Leap of Faith’

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Any tanker owner acquiring a VLCC today must be certain that his or her new ship will make more than $30,000 per day for the rest of its life, says an article published in Splash247.

Delivery to break

According to tanker broker Poten & Partners’ estimate, the price of a conventional VLCC has risen to $115 million, the highest level since 2009.

“At $115 million for a standard VLCC, an owner needs on average about $33,500 per day for the next 20 years after delivery to break even on the investment. Given where earnings have been in recent years, this requires quite a leap of faith,” Poten stated in its most recent weekly report, something the New York brokerage said was all the more tricky as tanker shipping is no longer considered a “growth” industry.

Returns to normal levels

According to Poten data, the VLCC orderbook is down to 6.5 percent of the fleet, and 19 percent of the VLCC fleet is at least 18 years old.

“If oil demand recovers and scrapping returns to normal levels, our industry is likely to face a capacity crunch in the next few years. This could lead to a significant boost in tanker earnings,” Poten concluded, pointing out that available yard slots for VLCCs are now only possible deep into 2025.

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Source: Splash247

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