Tanker Orderbook Set to Beat 2013 Record?

Investment in construction of tankers driven by stronger appetite in ordering of new tonnage so far this year has all the signs of beating the 2013 record, Gibson said in its weekly tanker report.

A total of 34 Very Large Crude Carriers (VLCCs) have been ordered during the first half of 2015, just marginally below the 2014 total and not far behind the number of orders seen in 2013, when investment in new VLCCs reached its highest level in several years, the report shows.

The picture is similar for Suezmaxes, with 30 orders so far this year, already more than half of all the orders for 2014 – the highest since 2010. Ordering activity for Aframaxes was considerably more muted in 2013-14, yet an impressive rebound has been seen this year with 40 Aframaxes on order, the highest since 2007.

Investment in new larger product carriers has also accelerated so far this year. In the LR2 segment, 37 tankers have been ordered, well above the number seen last year and more than half in 2013, when investment in new tonnage surged to its highest since 2007.

In the LR1 segment, 25 orders have been placed since January, just marginally short of the 2014 total, when investment jumped to its highest level since 2009, Gibson’s data shows.

In contrast, ordering activity for new Panamaxes has remained highly restricted, due to owners’ preference for coated tankers, according to Gibson. Investment in new Handy/MRs has also been very limited since 2014, albeit following an impressive surge in orders during 2012-13. Stronger investment in recent years has naturally boosted the size of the tanker orderbook, which by now has reached its highest level since 2011-12 for most size groups.

At present, VLCCs and Suezmaxes have the largest orderbook, at 18% and 17% respectively to their current size. The orderbook for other tanker classes is also substantial, with exception of Handy tankers.

“It will be interesting to see whether new tanker ordering activity will remain at similar robust levels in the second half of this year. If industry returns continue beating expectations, it most likely will be the case. Taking into account limited prospects for tanker demolition, which is another consequence of high earnings; all of the above means that the growth in tanker supply is going to start accelerating soon,” Gibson added.

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