In Hellenic Shipping News 02/07/2016
Values for second hand VLCC vessels have taken a plunge over the course of the past few months. For instance a five year old VLCC tanker is now worth more than $14 million less than it was worth back in February. However, according to shipbroker Alibra Shipping, this may not be such a bad thing. According to Alibra, “the value of a five year old VLCC of 305,000 dwt was assessed on Monday at just over $65 million, according to Baltic Exchange data.
Alibra said that “this figure is $3.4m below the estimate made seven days previously. Indeed, VLCC asset values seem to have fallen off a cliff. On February 22, the Baltic estimated the benchmark VLCC’s value at $79.3m, and its value has slumped since then, with depreciation gathering pace from mid-May. Why? For answers, look at the secondhand market, some 12 VLCC deals have been completed since January 1, at an average value of $56m per vessel, research from Deutsche Bank says. This is 25% below last year’s average. On June 23, Teekay Corp reportedly sold its fiveyear-old Korean-built VLCC Shoshone Spirit (314,000 dwt) to Pantheon Tankers for $62m. Another VLCC of the same age and build – Hanjin Ras Tanura (318,000 dwt) – achieved $75m when sold by Hanjin to Bahri in late February. But Deutsche Bank said depressed asset values are a good thing for the VLCC market because they disincentivise new ordering. Indeed, there have been orders for just five firm VLCCs this year to date, compared to 39 in the same period last year (excluding options and cancellations). The current orderbook isn’t expected to have an impact on fleet utilisation until the first half of 2017, which the bank said the low net fleet growth in the interim could support an “elongated crude tanker upcycle, which has positive implications in the 2018/19 timeframe”, Alibra Shipping concluded.
Meanwhile, in the tanker freight market this week, Alibra commented that “the effect of the Brexit is still uncertain. Brent oil dropped to a 7-week low on Monday but the shock has since steadied with price standing at 48.39USD/bbl as of Wednesday. Meanwhile the newly expanded Panama Canal is expected to ease US energy transport from the US East Coast towards Asia, says Fitch. Tanker sector still in cold state whilst everyone is waiting for a signal to happen. Period VLCC rates are still moving downwards hovering at around $38,500/day this week”.
Moreover, as London-based shipbroker Gibson pointed out on the tanker market out, “in the 1st half of this year crude tanker demand benefited from a major increase in Iranian crude exports. In addition, floating storage continued to rise. At the end of May, the number of non-trading VLCCs (including tankers employed in storage of Iranian crude/condensate) reached 9.5% of the existing fleet. However, at the same time we are also starting to see stronger growth in tanker supply. The VLCC market has witnessed 20 new additions so far in 2016, the same as for the whole of 2015. Deliveries in the Suezmax segment have been more restricted, yet the Aframax fleet has seen the biggest growth, both in terms of new deliveries and “migrants” from the clean segment”.
In a separate report this week, Allied Shipbroking added on the S&P market this past week, that “on the tanker side, activity seemed slightly more alive possibly boosted by the softer price ideas now offered by sellers. This has been greatly reflected by most of the sales that emerged this week, all of which show some degree of price softening compared to the previous comparable sales that had been done in each respective size and age group”.
