VLCC trades will be dominated by Asian owners, however, spare newbuilding yard capacity could threaten a market that otherwise looks like it is heading for a new balance, delegates at today’s Asian Tanker Conference were told
VLCC trades will be dominated by Asian owners, however, spare newbuilding yard capacity could threaten a market that otherwise looks like it is heading for a new balance, delegates at today’s Asian Tanker Conference were told.
In an opening paper titled An analysis of the tanker market: where is it heading? Banchero Costa Group’s global head of research Ralph Leszczynski said there was a clear shift in VLCC ownership towards Asia.
“Greeks still lead the way with 20% of the orderbook. However, Chinese owners account for 14%, South Korean owners 10%, Japanese owners 8% and Singaporean owners 4%.”
While Chinese interest accounted for the two single largest orders – COSCO has contracted 12 units and Sinocor 10 units – that nation’s yards have not fulfilled expectations that they would dominate the crude tanker newbuilding market.
“At least two thirds of all newbuilding orders are placed with Korean shipyards. And with less demand from the offshore and container sectors, as well as the merger between DSME and Hyundai Heavy, Korean yards will probably become even more aggressive in trying to bag new crude carrier orders.”
Crude seaborne trade volumes remain at all-time-highs with about 2Bn tonnes of trade per year. Chinese demand, which grew 10% last year, and is still growing, is the motor, although OPEC production cuts are hurting.
Mr Leszczynski expects demolition activity – which has been very strong since 2018 – to sustain for the next decade.
Newbuilding contracting is expected to be slow for the next two years, but the big unknown is how spare yard capacity and keen pricing will influence owners.
“The lack of available financing for everyone except the bigger names is restraining new orders,” said Mr Leszczynski.” Geopolitical uncertainty and the fact any newbuilding order would require a sizeable investment on a new fuel technology or to be prepared to run on a new fuel is also limiting new orders.
“Owners would rather wait and see, and this will probably be positive for rates for a couple of years.”