The Covid-19 coronavirus outbreak did not deter tanker sales, which were three distinct activities in the first six weeks of 2020: off-the-block resales, sales of 10-year-old tankers and sales in the 15-20-year-old category
The coronavirus outbreak may be impacting the tanker trades, but investors are taking a longer term view of the industry with investments taking place in resales, 10-year-old tankers and in the under 20-year-old group.
The first tranche of sales were the off-the-block resales highlighted by Euronav’s purchase of three VLCCs off the blocks at Daewoo shipyard. Euronav has not identified the specific VLCCs other than to report delivery will be in Q4 2020 and in January and February 2021 respectively and will therefore have exposure to the key winter freight markets in 2020/2021. According to VesselsValue, the seller was Sinokor of China, indicating that the sale may include a sale and leaseback element in the deal.
Euronav chief executive Hugo De Stoop justified the purchase and said at the time “The large tanker fundamentals remain constructive despite substantial headwinds surrounding economic activity linked to the novel coronavirus [Covid-19] that we believe and hope will be temporary. Current disruptions to the freight market have provided an opening for Euronav to be opportunistic and deliver what we believe will be long-term value for our stakeholders. This transaction demonstrates our flexibility and our capacity to seize opportunities thanks to a strong balance sheet and a robust liquidity position.”
In another resale deal, Hartree Partners sold two scrubber-equipped ECO-type VLCCs under construction at Daewoo for a reported US$106M each in January 2020. Hartree Partners ordered these in May 2018, for a reported US$83.5M each.
The second tranche of sales in the first six weeks of 2020 was dominated by the sale of five tankers (two LR2 tankers and three Aframax tanker) for undisclosed prices from companies connected to the Italian Bottiglieri family to another Italian company, Premuda. The sales are part of the bankruptcy process taking place in Italy, which has seen 13 tankers and dry bulk carriers leave the fleet in 2019.
Old age was the driver behind the third tranche of sales in the first six weeks of 2020. Russian Arctic shipping specialist Sovcomflot, under its new chief executive Igor Tonkovidov, is undergoing a fleet renewal process. Two 18-year-old Suezmax tankers have been sold for further trading for around US$18M to undisclosed interests. Both tankers were sold ahead of their next special surveys.
Special surveys are due in the next two years on the LR3 tankers Cape Bellavista and Cape Baxley, sold en bloc by König & Cie, now an Ernst Russ company. In the last 12 months König & Cie has sold off eight tankers. After delivery of the LR3 tankers, König & Cie will be left with just two vessels, an 18-year-old 1,550-TEU container ship and a 12-year-old Capesize bulk carrier.
Planning for each phase of the shipping cycle is essential for any tanker company. The key question is to know where we are on the shipping cycle. Hear the opinions of the experts on the tanker trade at the inaugural Tanker Shipping & Trade Conference, Americas on 15-16 April 2020 in Houston, Texas, USA.