Tanker orders increase 32% year-on-year

Tanker ordering levels have increased during the first few months of 2024. So far this year, 104 tankers have been added to the global orderbook, up from 79 for the same period last year, representing a year-on-year increase of circa 32%.

Values for tanker newbuildings have also increased across all subsectors. LR2s of 115,000 dwt show the biggest leap, up by about 7% from the start of the year from US$69M to US$74M, as values for this sector maintain their upward trajectory and hover around their highest levels since 2008.

Figure 1: Values for tanker newbuildings over the last five years, showing the percentage increase in values over the past three months. 

Of the tankers ordered this year, the majority were in the MR sector, accounting for about 37% of total orders, followed by VLCCs with around 31%, Suezmaxes with 19% and LR2s with 12%, respectively. Aframaxes were in fifth place with just 1% of all orders placed this year. No LR1 orders were reported. More than half of these orders have been placed at Chinese yards, which took a share of 57%. South Korea ranks second with a share of 36%, and Vietnam ranks third with 6%. Japan accounts for just 1% of tanker orders placed in 2024 to date. 

Greek buyers have been the most active in ordering tankers, with 28 orders placed this year, mainly in the Suezmax sector.

The Greeks are followed by Indonesian owners, as Pertamina ordered 15 MR tankers in January of this year, scheduled to be built at Hyundai Mipo and delivered in 2026. Contracted for US$48M each, en bloc, VesselsValue values the tankers at US$49M each.

Bermudian owners placed the third-highest number of orders, with a total of eight. 

This overall increase in demand for new tankers comes as owners seek to renew ageing fleets and seize the opportunity to order vessels able to meet the latest environmental regulations. In addition, KYC on secondhand sales is becoming stricter to clamp down on those who continue to carry sanctioned cargoes. Securing a newbuilding allows for a clean title on a ship, which puts the owner in a strong position for any future transactions. Positive sentiment for this sector going forward is also a key driver for new orders.

Firm earnings over the last few years, due to increased tonne-mile-equivalent demand, has also provided support to the tanker sector, currently led by VLCC earnings which are around US$44,800/day for one year, an increase of some 6% year-on-year.

Geopolitical uncertainties have buoyed earnings in the tanker sector, too, along with the improved demand outlook. Disruption in the Suez Canal as a consequence of the Houthi attacks on the Red Sea has forced owners to travel longer distances; this has firmed earnings for crude oil cargoes, combined with the increase in tonne-mile demand due to changes in trade flow patterns that have arisen as a result of sanctions on Russian oil cargoes. 

Notable recent tanker newbuilding contracts include four MR2 tankers of 50,000 dwt ordered by EuroGreen Maritime, scheduled to be built at Wuhu Xinlian Shipbuilding and delivered in 2026, contracted for US$63M each en bloc, with a current VesselsValue valuation of US$60M each. Also, Union Maritime has ordered two LR2 tankers of 115,000 dwt, scheduled to be built at Hyundai Vietnam and delivered in 2027, contracted for US$71M each, with an identical current VesselsValue valuation of US$71M each. 

*This article has had minor edits for style.