MR Tankship Market Analysis: Second-Hand Price-Rise Outstrips Newbuild

MarineLink.com
Monday, March 31, 2014
MR2 Tanker Values: Image McQuilling Services

In their latest analysis, shipbrokers & marine transport consultants, McQuilling Services, in their latest analysis discuss observations, current and historical, for the clean tanker market, specifically MR tankers. The report concludes that they believe the current MR secondhand asset market will adjust to reflect the weak TCE (Time Charter Equivalent) environment over the longer term. Excerpts as follows:

" In Figure 1 [shown here] we display the price movements over the last 15 months for MR2 newbuildings, five-year and 10-year old vessels. During this period, we witnessed a sharp increase in five-year old prices (31%) and ten-year old prices (24%) while newbuilding values increased by a modest 11%.

As discussed in our previous industry note, we would expect prices for secondhand tonnage to closely follow movements in TCE levels with newbuilding prices being dictated by the market’s future expectations. However, the five-year old asset price trend line increased throughout the year. We believe the conviction displayed by market participants promoting the long-term growth potential in clean products may have led to an impulsive desire to buy up secondhand tonnage despite TCE rates coming under pressure. Reality may however be trickling through as five-year old values have been falling recently.

If we conclude that the secondhand asset market is correcting to reflect the weaker TCE results, the question is then whether the future looks any brighter. Is it likely that there will be an asset contango in the MR sector on the horizon?

The long-term CPP tanker demand growth story is in part based on additional refining capacity coming online in Asia and the Middle East coupled with the potential for further refinery closures in Europe. The expectation is that this combination may lead to significant ton-mile demand growth in the coming years and the prospect has propelled owners to build-up their clean tanker fleet via newbuildings.

One of the main challenges to a recovery for MRs in the longer term is the alarming amount of orders placed in the last couple years along with the subsequent delivery profile moving forward.

In conclusion, we believe the current MR secondhand asset market will adjust to reflect the weak TCE environment and pressure from a strong delivery profile will strain the optimistic expectations that have been promoted by owners and investors over the longer term."

Source: McQuilling Services

 

 

 

Maritime Reporter March 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

Carnival Sails to Profit

The world's largest cruise company Miami-based Carnival Corp reported a net profit of $49 million, or 6 cents per share in the first quarter ended Feb. 28.   That

Ukraine Arrests Turkish Ship for Visiting Crimean Port

Turkey owned merchant ship flying the flag of Tuvalu was arrested by Ukrainian authorities over a visit it made to a port in Crimea, reports Reuters. The ship's captain detained.

USCG Flush Ice down River Systems to Facilitate Shipping

The Coast Guard cutter fleet is flushing ice through the Great Lakes river systems to prevent ice jams and facilitate commercial shipping as the shipping season

Shipbuilding

First Supramax Vessel for Japan-Italy Venture

'DACC Tirreno' was delivered at the Oshima shipyard in Japan yesterday, the first of four Supramax bulk carriers for the dACC Maritime Limited fleet, the joint

Austal Graduates 48 4-Yr Apprentices

Austal USA combined two classes to graduate a total of 48 members of Austal’s cutting-edge four-year apprenticeship program yesterday at a formal ceremony held at the Arthur R.

BAE Systems to Expand San Diego Shipyard

BAE Systems announced it will invest approximately $100 million to expand drydocking capabilities at its San Diego shipyard.   The investment, which will include

Tanker Trends

NORDEN CEO: Bulk Market Challenges to Continue

Klaus Nyborg, interim CEO at Denmark-based dry bulk and product tanker shipping company Dampskibsselskabet NORDEN A/S, expects difficult dry cargo market conditions

Helios LPG Pool to Start Operating

Dorian LPG Ltd. today announced the commencement of operations of Helios LPG Pool LLC on April 1st, 2015.  Helios LPG is jointly run by Dorian LPG and Phoenix Tankers Pte.

Stolt-Nielsen Completes Bond Issues

Stolt-Nielsen Limited announced the placement of senior unsecured bonds in a total amount of NOK 1,100 million in a new five-year bond issue carrying a coupon of 3M NIBOR plus 4.

Ship Sales

Yachting Malta PPP Sets Sail

Yatching Malta Ltd (YML) - a new public private partnership (PPP) between the government and the Royal Malta Yacht Club (RMYC) was formed with the aim of putting Malta on "the global yachting map".

China Cosco's Profit Up 54%

The Shanghai-and-Hong Kong-listed flagship unit of China Ocean Shipping Group, China Cosco Holdings Co Ltd says that its 2014 net profit went up 54 percent y/y at 362.

Damen joins World Ocean Council

Dutch-based Damen Shipyards Group has become the latest member of the World Ocean Council (WOC).    The global shipbuilder headquartered in the Netherlands is

Finance

JV Wins $2bln Freeport LNG Contract in US

A joint venture (JV) between CB&I, Chiyoda International and Zachry Industrial has won a contract worth over $2bn from FLNG Liquefaction 3 for a liquefied natural

Puerto Rico Readies for Largest Cruise Ships

Thanks to a pier expansion and enhancement, Puerto Rico will welcome the two largest cruise ships in the world, Royal Caribbean International’s Oasis of the Seas and Allure of the Seas, in 2016.

Carnival Sails to Profit

The world's largest cruise company Miami-based Carnival Corp reported a net profit of $49 million, or 6 cents per share in the first quarter ended Feb. 28.   That

Consulting

Holland America Line Ships Score 100

On recent routine United States Public Health inspections (USPHI) conducted by the U.S. Centers for Disease Control and Prevention, Holland America Line’s ms Statendam,

Princess Astrid visits DP World

Antwerp Gateway, managed by DP World (one of the largest container terminal operators in the world) is a significant contributor to the success of the Port of Antwerp.

LOC Group Announces Two Appointments

Global marine engineering consultancy LOC Group (London Offshore Consultants) announced appointments in two new positions; John Quarrington has joined the company

 
 
Maritime Contracts Maritime Security Maritime Standards Naval Architecture Navigation Offshore Oil Pipelines Pod Propulsion Salvage Shipbuilding / Vessel Construction
rss | archive | history | articles | privacy | terms and conditions | 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: 0.2027 sec (5 req/sec)