Spotting trends in the VLCC orderbook

In the first half of 2019, tanker sales and purchase activity was weak with only 141 vessels sold and an investment of US$2.8Bn, according to VesselsValue.

The shipping data provider ascribes the decline to the wariness of investors of the poor market sentiment and earnings, but also from changing global regulations and an increase in sanctioning activity from the US.

It notes that modern assets have performed the best with resale prices for VLCCs in particular reaching a recent five-year peak at US$98M. This is partly due to rising newbuilding costs but also a function of owners looking to reposition themselves with modern high-spec assets in time for IMO 2020.

Recent VLCC time charter fixtures suggest that charterers are willing to offer premiums for scrubber-fitted vessels. A prime example of this being a 2018-built scrubber-fitted VLCC Maria P Lemos being fixed to Mercuria for three years at US$43,000 per day, a rate that has not been seen in over four years.

But there was also good news at the older end of the market. The shipping data provider also noted that there has been a firm market for VLCCs of 15 years and older, and since the beginning of 2019, nine were sold of this vintage. The firm earnings environment at the end of 2018 and early 2019 may have been the trigger for the sales for further trading to players looking to profit from the short term increase in rates.