The gap between supply and demand is closing, due to a decline in tanker deliveries over 2018
The gap between supply and demand is closing, due to a decline in tanker deliveries over 2018
The decline in tanker ordering in 2017 has resulted in a slowdown in tanker deliveries in 2018, almost the opposite of the situation in 2009. According to VesselsValue’s data, deliveries fell by 50 tankers (VLCC, Suezmax, and Aframax sized) in 2018 compared to 2017.
In the VLCC sector, deliveries were lower in 2018 (39) compared to 2017, when 50 VLCCs were delivered. Clarkson Research Services (CRS) projects that the active VLCC fleet (excluding combination carriers, laid up and storage) may have contracted slightly in 2018 to 219.9M dwt (2017: 220.6M dwt) and will grow by 5% in 2019.
On the VLCC demand side, CRS projects that there was a 2% growth in VLCC demand in 2018 and this could rise to 5% in 2019. As a result, VLCC supply could match the demand growth in 2019.
The top five receivers of VLCC deliveries – Bahri Tankers, China VLCC, Maran Tankers of Greece, DHT Holdings, and COSCO Shipping Energy Transportation – drove the growth in the VLCC fleet in 2018. Indeed, Bahri Tankers’ growth in the VLCC sector can be traced back to 2012, when the Saudi Arabian listed company announced a restructuring programme. This included the takeover of Saudi Aramco’s shipping company Vela and the creation in 2015 of the US$1.5Bn APICORP Bahri Oil Shipping Fund (ABOSF) to purchase new VLCCs.
The delivery of the 298,700 dwt Amad in May 2018 was the culmination of 10 VLCCs ordered from Hyundai Samho at a cost of US$98M each. Bahri took delivery of five VLCCs in 2018, the same as in 2017. Following the sale of the 1996-built, 300,400 dwt Wu Xian to a recycling yard in Bangladesh, the Bahri VLCC fleet now numbers 45 vessels, making Bahri the second largest VLCC in the world.
Largest fleet
Currently, the largest owned VLCC fleet belongs to China VLCC, which took delivery of five more VLCCs in 2018 to bring the fleet total to 49 VLCCs. The latest addition was the 307,500 dwt New Assurance, delivered by the Dalian Shipbuilding Industry Corp., in August 2018. The Dalian Shipbuilding Industry Corp., is due to deliver five more vessels to China VLCC in 2019, including New Honor which entered the water in January 2019.
Maran Tankers of Greece (part of the John Angelicoussis group) took delivery of four VLCCs in 2018 (three in 2017). All four 318,000 dwt vessels were built by Angelicoussis’ favoured builder Daewoo in South Korea and form a string of 17 VLCCs, including five due to be delivered in 2019. So far, one VLCC, Pascagoula Voyager, was launched in early January 2019. Maran Tankers recently announced that it was to retrofit Ecochlor ballast water management systems (BWMS) to its fleet, but it is not known if this make is fitted to the newbuildings.
“Deliveries in the Suezmax sector were down by over 40% in numerical terms year-on-year in 2018”
DHT Holdings’ VLCC DHT Bronco was the subject of a Ship Description in the October/November issue of Tanker Shipping & Trade. The philosophy of the pure play VLCC company is reported in detail in the article and is required reading for any aspiring VLCC entrepreneurs. It is a sign of the times that the two co-chief executives of DHT Holdings have announced they are moving their offices to Singapore – which will no doubt be discussed at the Asian Tanker Conference. The four VLCC newbuildings that joined the fleet in 2018 brings the average age of the 27-strong VLCC fleet down to seven-years.
The fifth largest receiver of VLCC tonnage in 2018 was COSCO Shipping Energy Transportation (CSET), which took delivery of three VLCCs in 2018 (six in 2017) to bring its VLCC fleet to 43 vessels. The latest delivery was Cosnew Lake, launched in September 2018 from Dalian Shipbuilding Industry Corp., which has produced 24 of the VLCCs in the current CSET fleet. In addition, CSET has six VLCCs on order, four with Dalian Shipbuilding Industry Corp., but none are due in 2019.
Deliveries in the Suezmax sector were down by over 40% in numerical terms year-on-year in 2018, with just 39 deliveries spread over 19 companies. CRS expects that the active Suezmax fleet (which excludes combination carriers, laid up and storage) may have grown by 2.4% in the full year 2018, representing a significant slowdown compared to 2017, due to high levels of scrapping. In 2019, the fleet is projected to continue to grow at a similar, moderate pace.
Driving the modest supply growth in 2018 were several deliveries to Dynacom Tankers, Euronav, and Ocean Yield ASA.
Over half the Dynacom Tankers-owned fleet capacity is in the Suezmax sector and numerically 30 of the 64 tankers in its fleet are Suezmax tankers. The six Suezmax delivered in 2018 were part of a string of nine Suezmax orders placed at New Times Shipbuilding in China. The last to be delivered was the Sikinos 1. Although Dynacom Tankers has no further Suezmax orders, the yard has reported contracts for very similar tankers on its orderbook.
Scrubbers and BWMS
Tanker Shipping & Trade Tanker Operator of the Year Award Winner Euronav took delivery of four Suezmax in 2018, taking its fleet size to 25 vessels and making it the third largest owner of this size of tanker after Teekay and Dynacom Tankers. The latest quartet were built at Hyundai Samho and given that Euronav’s chief executive is a well-known sceptic of exhaust gas treatment systems (scrubbers), it seems likely that these vessels will be utilising an alternative method to comply with the 2020 IMO global sulphur cap.
One company that is definitely using scrubbers is Okeanis Eco Tankers, which is a scrubber-fitted VLCC play partly financed through a sale and leaseback deal with Ocean Yield. Oslo-listed Ocean Yield was formed in 2012 to manage the maritime assets of serial Norwegian investor Kjell Rokke and his main vehicle Aker. Three Suezmax tankers delivered in 2018 were financed by Ocean Yield and are part of a sale and leaseback deal with Nordic American Tankers (NATS), which has taken the three vessels on bareboat charter with options to buy the vessels at various time periods during and at the end of the charter. Neither Ocean Yield or NATS has any further Suezmax tankers on order.
“Demand for crude Aframax tankers in 2018 was similar to 2017 and growth was marginal”
The fall in Aframax deliveries between 2017 and 2018 was around 20%, down to 53 vessels. CRS projects that demand for crude Aframax tankers in 2018 was similar to 2017 and growth was marginal. On the supply side, the active Aframax fleet declined slightly, due to an increase in scrapping. The CRS outlook for 2019 is an increase in demand growth to 3%, driven by Asian crude oil imports. Crude Aframax fleet growth is expected to increase by 3%, according to CRS.
Torm took delivery of four LR2 Aframax-sized product tankers in 2018 from the Chinese builder CSSC OME. All four are believed to have been equipped with BWMS and scrubbers. Torm is reported to have a stake in BWMS manufacturer ME Production.
The Martinos family, Minerva Marine, also took delivery of an LR2 Aframax-sized tanker and three crude Aframax tankers in 2018. The latter were delivered from Sasebo in South Korea, with another due in 2019. It has been reported that Minerva Marine is retro-fitting some of its tankers with Wärtsilä’s Aquarius ATEX-compliant Electro Chlorination EX filtration and electro-chlorination BWMS, but it is not known which system is fitted to the newbuildings.
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