zoomImage Courtesy: HHI

With contracting this year only slightly less subdued than in 2016, there has been a welcome influx of activity in the very large crude carrier (VLCC) sector, Clarksons Research informed.

In the first five months of 2017, there have been 27 VLCCs of a combined 8.5 million dwt reported ordered. This is a 366% increase year-on-year in dwt terms on extremely subdued 2016 levels and has provided a much needed boost for certain shipyards.

VLCC orders account for 52% of year to date contracting in dwt terms as well as 11% of estimated year to date investment. If in the first 5 months of 2017 there had been as many VLCC orders as the same period last year, then total global ordering in the year to date would have suffered a 50% decrease year-on-year in dwt terms.

“Shipowners have been placing orders in the VLCC sector against a backdrop of falling newbuild prices, with the guideline newbuild price for a c.320,000 dwt vessel dropping to USD 80 million in March this year, its lowest level since February 2004,” Clarksons said.

These low prices have proved attractive to owners, though contracting in the other crude tanker sectors has remained muted, with only 2 Suezmaxes and 5 Aframax crude tankers reported ordered in the year to date.

The majority of orders in the year to date, around 70%, have been placed in South Korea. This has provided much needed support for some yards, and has helped the Korean orderbook to eventually increase in dwt terms following 19 months of continuing decline.

Korean yards currently account for 44% of the VLCC orderbook, while Chinese and Japanese yards clinched 30% and 19% of the VLCC orderbook, respectively.