Greeks revitalise the 'dying' LR1/Panamax sector with newbuilding boost

Xclusiv Shipbrokers research analyst, Eirini Diamantara, told Riviera that the current Panamax/LR1 orderbook-to-fleet ratio stands at 12.8%. There are 60 vessels on order out of 468 currently sailing. Notably, Greek shipping companies are responsible for half of these orders, with 30 vessels in total.

Since January 2024, Xclusiv Shipbrokers has recorded fresh newbuilding deals for 26 Panamax/LR1 tankers, of which 14 (54%) have been signed by Greeks.

Prominent owners such as George Prokopiou’s Dynacom Tankers, Nikolas Tsakos-backed Tsakos Energy Navigation, Aliki Paliou-led Performance Shipping, and Kriton Lendoudis-run Evalend Shipping have all made significant LR1 orders in recent years.

In terms of pricing, Xclusiv Shipbrokers’ latest report indicated a Panamax tanker was valued at approximately US$61.5M in shipyards this September, reflecting an 8.0% increase compared with the same month last year.

Ageing fleet

The LR1/Panamax market has often been characterised as a declining sector, primarily due to a lack of modern tonnage.

Examining the age distribution of the on-the-water fleet, data from Xclusiv Shipbrokers reveals 44.8% of vessels are currently aged between 16 and 20 years, while 26.7% belong to the 11-15 years age group. Furthermore, newbuilds to five-year-old tankers account for just 7.5% of the sailing fleet, while young to mid-sized vessels (6-10 years) represent a 12.6% share.

Gibson Shipbrokers has estimated that by the end of this year, 16.5% of the fleet will have exceeded 20 years of age, with another 33.0% turning 20 between now and 2028.

Trade structure and demand

According to Gibsons, Latin America currently generates over 60% of the total tonne-mile demand for the Panamax sector, demonstrating resilient demand in the market.

Analysts highlighted that LR1/Panamax tankers have limited captive markets and have largely remained unaffected by supply chain disruptions.

“Total LR1 CPP volumes in their core Middle East and India markets have remained steady over the past five years, with most downward pressure originating from the Far East and northern Europe due to changes in the refining landscape,” noted Gibsons.