Tankship Oversupply May be Moderating: Analyst

By George Backwell
Monday, August 18, 2014
Current orderbook for tankers, 30,000 dwt & larger: Image courtesy of Poten & Partners

Slip...N’ Slide into better times but watch the rocks and grit says Poten & Partners of the global tanker order book in their latest 'Tanker Opinions'; but any rapid influx of tanker tonnage could seriously hinder the upside in earnings for the longer-term.

Although the Caribbean market for Aframaxes has taken a precipitous tumble this week, other tanker segments have maintained healthy spot rates suggesting that vessel oversupply could be moderating in the general sense.

A look at the current orderbook across all segments provides some insight as to what is still coming down the pike, but more curiously what has slipped or has fallen off the radar all together. Since ordering momentum continues, due in large part to a feeling that the market is coming off of cycle lows, the threat of vessel oversupply looms. However, the uptick in ton-mile demand could offset the incremental new tonnage supply in the near term.

The current orderbook for tankers, 30,000 deadweight and larger, is 66.1 million deadweight tons (mDWT) through 2017, (see Fig. 1 pictured here). What is the most interesting about these statistics, however, is not the incremental capacity that has been ordered this year, but that the reported new orders do not account for the differential between the January 2014 orderbook and that of today.

At the start of the year, the 2014 orderbook was 27.2 mDWT, the current orderbook is 15.9 mDWT and only 8.1 mDWT has reportedly delivered. This differential suggests that 3.3 mDWT, or 12%, of the originally reported orderbook is on a surface level unaccounted for.

The likely explanation is that these vessels have simply slipped into later years. Looking at the year-to-date delivery pace, this could explain for the majority of that differential. The bulk of the orderbook, 41% is made up of VLCC tonnage, the majority of which is currently slated to deliver in 2016.

As of the beginning of August 2014,, 11 VLCCs have been delivered of an initially expected 36. At this rate, the total deliveries for full year 2014 will be 20 vessels; 16 VLCCs have slipped forward, or been renegotiated and or cancelled.

On a sector-by-sector basis, a thorough review of credit risk from the shipowner and shipyard perspective can help to hone the view on the actual new supply expected. For example, speculation surrounding the ultimate deliverability of the Suezmax orderbook is a function of both shipyard capability and orderer of record.

Some schools of thought believe that the Suezmax orderbook is realistically only 55% of the 62 vessels reportedly on order, suggesting that widely reported orderbook numbers grossly overstate the reality of new tonnage supply in the next few years.

While shipyard statistics is sometimes a pseudoscience, shipowners are still cautioned not to over-do the ordering in the grander sense. Although, for many, it is still difficult to forget the glut of tonnage that has largely plagued the market for most of the past decade, group-think is a powerful force.

Today’s freight environment suggests the faint hope of light at the end of the tunnel, but any rapid influx of tonnage could seriously hinder the upside in earnings for the longer-term.

Source: Poten & Partners

Maritime Today


The Maritime Industry's original and most viewed E-News Service

Maritime Reporter May 2016 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

MSHS Group President Recognized for Safety Leadership

Signal Mutual Indemnity Association, a self-insured group provider of Longshore benefits, presented MSHS President Are Friesecke with the Francis R. Sharp Executive

Apply Now for the MN 100

The August 2016 edition of MarineNews, the leading voice in the North American workboat market, will feature 100 leaders and innovators, including workboat owners and operators,

Mothballed Vessels SE Asia Reflect Oil Slump Pain

Around 1,300 offshore support vessels lying idle worldwide. Not everyone in shipping is bemoaning the industry's worst crisis in living memory: a cluster of

Contracts

Asian Traders Unload Floating Gasoline as Market Flips

Gasoline shifted from tankers to landed storage or sold off; forward gasoline prices to flip to backwardation from July. The number of tankers storing gasoline

Bulgaria, Greece to Consider Greek LNG terminal

Bulgarian state energy holding company BEH and Greek natural gas company Gastrade have set up a joint task force to prepare a proposal to build an off-shore liquefied

Harding Sold to Palfinger

The PALFINGER Group has signed today the acquisition of 100 per cent of the shares in Herkules Harding Holding AS and thus, the globally operating Harding Group.

Shipbuilding

Damen Delivers Floating Pump Station to Hamburg

Hamburg Port Authority (HPA) has taken delivery of the Sauger III, a custom floating pump station by Damen Shipyards Group for supporting dredging operations. Situated

Mothballed Vessels SE Asia Reflect Oil Slump Pain

Around 1,300 offshore support vessels lying idle worldwide. Not everyone in shipping is bemoaning the industry's worst crisis in living memory: a cluster of

Strategic Marine Building Luxury Crewboat

Strategic Marine announced the kick-off of its first collaboration with PT. Pelayaran Tanjung Kumawa, expecting to deliver an exclusive luxury crewboat in November this year.

Tanker Trends

A Year is a Long Time in Tankers

The latest Gibson Market Report focused on the age profile of the VLCC fleet and the prospects for trading life beyond 15 years of age.    Analysis of the Suezmax fleet shows a similar picture,

Strike In France: Implications for Tanker Demand

After the oil industry suffered from a severe drought in Venezuela, forest fires in Canada and rebel attacks on oil installations in Nigeria, it is now facing

Floating Storage Flattens Fortunes of $50 Crude

The prices of WTI and Brent crude briefly rose above $50/bbl during intraday trading on Thursday, the highest level seen since the end of July 2015, giving traders a brief moment of optimism,

Finance

Baltic Index Up On Higher Capesize Demand

The Baltic Exchange's main sea freight index, tracking rates for ships carrying dry bulk commodities, rose on Tuesday helped by an increase in demand for capesize vessels.

Mothballed Vessels SE Asia Reflect Oil Slump Pain

Around 1,300 offshore support vessels lying idle worldwide. Not everyone in shipping is bemoaning the industry's worst crisis in living memory: a cluster of

Asian Traders Unload Floating Gasoline as Market Flips

Gasoline shifted from tankers to landed storage or sold off; forward gasoline prices to flip to backwardation from July. The number of tankers storing gasoline

Consulting

US Navy Updated Zika Virus Infection Guidance

Navy Medicine released updated Zika Virus Infection guidance in NAVADMIN 121/16, May 26, communicating current information, travel precautions, and risk reduction

Long Beach Port Maintains Strong Bond Rating

Fitch Ratings, one of the top three U.S. credit analysis agencies, has affirmed the Port of Long Beach’s “AA” rating on its outstanding debt. Fitch stated the AA rating — its highest for U.

OOCL Renews VOD Training Contract

Videotel, producer and distributor of training videos, 3D animation, and e-Learning courses to the maritime market and part of KVH Industries, Inc., (Nasdaq: KVHI),

 
 
Maritime Careers / Shipboard Positions Maritime Security Navigation Offshore Oil Pod Propulsion Port Authority Salvage Ship Electronics Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1407 sec (7 req/sec)