A rush of orders for container ships and LNG carriers has filled the largest slots in the major shipyards in China, South Korea and Japan, and only tanker owners with long-standing relationships with a builder are going to find room for a VLCC before 2024, say brokers and shipyard observers
“If you want a new ship from the big three countries you start with a minimum wait of three years for delivery,” reported BRL in its latest BRL Weekly Newbuilding.
The sudden absorption of large ship newbuilding capacity at the major shipbuilders in China, South Korea and Japan is blamed on the increase in demand for LNG carriers, where the largest LNG shipbuilding programme in history is unfolding, and is now being challenged by orders for large container ships, driven by rampant freight rates.
“The boom has now produced the highest number of vessels ordered in a first quarter for the major trading types in 13 years,” reported BRL, which also noted that the current rate of contracting could see 2021 hit a five-year peak.
The downside is that slots are filling so fast, that 2024 is now the earliest delivery slot being quoted. That rule does not generally apply to companies associated with the yard group or to foreign owners that have remained loyal to the shipyard.
BRL reported that Samos Steamship of Greece has booked another VLCC in the last few weeks at an unnamed shipyard in Japan. All the live tankers in the current Samos fleet were built in Japan, despite the higher costs in Japan compared to other Asian shipbuilding countries.
The John Inglessis’ family controlled outfit has two Suezmax tankers on order at Japan Marine United and two Aframax tankers on order at Sumitomo for 2021 and 2022 delivery.
Other tanker owners are exercising options: Adnoc Logistics and Services has taken up one of three options it had at Daewoo for LNG dual-fuel VLCCs to add to the three other firm contracts.
In other developments, MSI, in its latest tanker Horizon’s report, notes, “March saw an uptick in scrapping activity with about 0.8M dwt removed across the whole fleet”.
It added that while overall delivery levels were similar to February, this should mean Q1 2021 sees a sizable uptick in new tonnage arriving in the market compared with Q4 2020.”
Clarkson Research Services (CRS) has also reported an uptick in tanker secondhand values. Five-year-old VLCC prices have risen by 7% in the last three months, which is remarkable given the poor condition of the tanker market. This firmness in secondhand tonnage values is evident across all tanker size ranges.
CRS qualified the rise in the three-month trend, “Tanker pricing fell once the storage-driven market spike a year ago subsided. While prices have risen a little in 2021 so far, our tanker secondhand price index is still 11% down on March 2020, and the price of a 10-year-old VLCC is down 12% (US$6M) at US$46M. Perhaps, given the stress on the tanker markets, the surprise is that prices have not fallen further, and that buyer appetite has been sustained,” it noted in Shipping Intelligence Weekly.
Of course, the reports of full orderbooks may be classic broker talk to push up prices and force owners to commit to orders (and fees) and the rush for container ships may yet melt away as the slots are converted into other ship types.
In the background is the requirement to transform the carbon footprint of the tanker fleet, and at the moment, only a few shipyards are able to offer LNG- or methanol- powered deepsea tankers, and ammonia is in the development stage – creating another bottleneck for owners seeking to replenish their fleets.
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