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Tanker owners face battle to rejuvenate fleets

Tanker owners face battle to rejuvenate fleets
Sam Chambers May 2, 2022

Tanker owners anxious to rejuvenate their fleets will have to be patient and fork out very considerable sums, new data from broker Gibsons shows.

With record amounts of containerships and LNG carriers ordered over the five last quarters, shipyards are sitting on near-three year orderbooks.

The strong position the yards find themselves, combined with higher input costs such as steel plate and labour, have seen newbuild prices soar over the past year.

A standard VLCC newbuild is now estimated at $116m, according to Gibsons, with a suezmax at $78m and an aframax costing $60.5m. This compares to $92m, $63m and $51m respectively in January 2021.

Higher profit margins for other ship types means yards in general are unwilling to offer tanker newbuild slots until at least 2025, analysts at Gibsons stated in the company’s most recent weekly report.

On top of that, tanker owners have to contemplate alternative, more expensive forms of propulsion for any newbuilds with Gibsons suggesting a dual-fuel LNG VLCC costs $19m extra, and $13m extra for a duel fuelled aframax tanker.

Tanker orders are very thin on the ground. Sister title Splash Extra reported last week that no crude oil tankers were contracted in Q1 this year. The last time this happened was Q4 1995.

The inability to source prompt newbuild tonnage combined with the changed fortunes of the tanker trades after a terrible 2021 mean the value of the existing fleet is heading upwards.

Average tanker earnings in April jumped to around $40,000 a day, in the top 10% of all values since 1990 and compare very favourably to an average of around $8,000 a day between mid-2020 and February 2022, according to data from Clarksons.

The Baltic Exchange on Friday increased valuations for all tanker sizes for the tenth consecutive week. The Tanker Sale and Purchase Index was adjusted upwards for five-year VLCCs to about $49.3m, for suezmax tankers to about $35.6m, for aframax tankers to about $30m and for MR tankers to about $28.4m.