VLCC deliveries in 2011 four times higher than 2010 says shipbroker
Monday, 23 January 2012 | 00:00
The oversupply in the tanker market has often been discussed as the "culprit" which plagued tanker earnings during the past year. In its latest weekly report, London-based shipbroker noted that "the increase in the tanker fleet largely outpaced demand growth, putting further pressure on earnings in an already highly competitive market. VLCC deliveries in 2011 averaged over one a week (60), four higher than 2010, whilst there was a similar picture for Suezmaxes (44 deliveries), 7 higher than 2010. Of the 439 new tankers (25,000+ dwt) originally scheduled to enter service in 2011 just 282 tankers were delivered within their original timeframe. The remaining 157 were either subject to newbuilding contract renegotiations resulting in delivery delays or cancellations, accounting for around 36% of the original orderbook. Breaking this down further by size, LR1/Panamax deliveries were just 52% of the original schedule; while MR and Suezmaxes were slightly higher at 60% and 64% respectively. VLCC deliveries were marginally higher at 67%, but it was the LR2/Aframax newbuilds which were highest with over three quarters (78%) of all scheduled deliveries actually adhering to their original due dates" said Gibson.
It went on to mention that "although the number of tankers scheduled to enter into the market in 2012 is significantly less than scheduled for 2011, the tanker market is still suffering from the effect of the previously swollen orderbook. Thankfully, orders placed in 2011 are about 50% lower than those placed in 2010. Based on the assumption that around 25% of scheduled deliveries will not arrive this year, some 247 new tankers will still join the fleet in 2012, which on the face of it would indicate fewer deliveries than last year.
Even if the delivery of tanker newbuilds continues to slow, a considerable increase in global
oil demand and trade will still be required to significantly boost owners’ prospects. Although demand has been rising, the IEA in its most recent report has revised down its forecast for global oil demand growth in 2012 by 0.2million b/d to 1.1million b/d. Nonetheless this is still more than the 0.7million b/d increase seen in 2011. Hence across the whole tanker industry we are looking at slower growth in tanker supply this year and potentially a bigger increase in oil demand. However, at this stage any improvement in tanker fundamentals is likely to be limited; but the prospects for 2012 look better than 2011(but that’s not difficult!)" concluded Gibson.
Meanwhile, in the tanker markets this week, Gibson said that it had noted in the week before of the potential for VLCCs in the Middle East Gulf to 'pop' in the lead up to the Chinese New Year, and the market definitely read the script! "Owners also managed to kill two birds with the same stone - pushing the market through its' previous ceiling, and then converting onto the new, higher, worldscale flat rates at levels that had been the peak on the 2011 Scale. Now things are set to slow somewhat, but for the near term, Owners should hold the gain. Currently rates to the East operate at around WS 65 (2012) and WS 38 (2012) West. Suezmaxes also had a busy week of it with a raft of short haul cargoes impacting on a very tight early list to force rates to close to 130,000 by WS 100 on the new worldscale, and next week should see no let up, despite the holidays. Aframaxes completed the positive picture in the area with strong activity allowing rates to push to 80,000 by WS 135 to Singapore with a 10 worldscale point premium for Red Sea loaders" said Gibson.
It went on to say that "Suezmax Charterers in West Africa took their foot off the gas, and predictably that undermined Owners confidence so that by the weeks' end rates had been corrected down to 130,000 by WS 82.5 for U.K. Continent, and perhaps a touch lower for US Gulf with WS 88.75 paid for a run to the East. Next week should start to see some bargain hunting at the lower level, and if that gets too frenetic, then Owners may once again turn the trend. VLCCs remained extremely tight on early positions, and very reliant upon ballasters from the East to supplement even forward positions, and as the AG improved, so Owners raised their ideas to equalize earnings. Rates bumped higher to 260,000 by WS 65 (2012) to the East, and USD 5.1 m for West Coast India whilst rates to the US Gulf theoretically move at around WS 67.5 (2012).
Too many ships - not enough cargoes.. so it goes for Aframaxes in the Mediterranean, and rates necessarily fell to 80,000 by WS 85 cross-Mediterranean, with a reduction in Bosphoros delays not aiding the cause either. Some of the slack has now been taken up, but it will need a lot more before any significant turnaround can be engineered. Suezmaxes had a quiet week of it, and sentiment became compromised by the softening West African scene. Rates were chipped away to 135,000 by WS 87.5 from the Black Sea to European destinations with rates in the low WS 70’s seen for US Gulf. Next week will become busier, so rates should stabilise from now.
VLCCs in the Caribbean kept rates at up to USD 5.2 m for Singapore with Owners pushing for even higher values on the next deals. Some may succeed, but it will be the earliest vessels that get the full benefit with later positions providing more competition. Aframaxes took a rare upward stride to 70,000 by WS 135 upcoast, but had started to fall away again late-week to end closer to WS 120 and Owners will stay on the defensive through next week" concluded Gibson.
Nikos Roussanoglou, Hellenic Shipping News Worldwide