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The order boom will end next year

Wed 10 May 2017 by Barry Luthwaite

The order boom will end next year
Order activity is peaking. The question is now what will follow

The order backlog and new order intake this year is at pre- financial crash levels. A total of 1,129 tankers are on order, aggregating 103,617,963 dwt. The bubble will not burst just yet, but is unlikely to continue beyond this year.

Yards are delivering record volumes of tanker tonnage
Tankers delivered since January 2017  
vessel type no dwt
Aframax 26 2,878,937
Handymax 29 1,333,190
Handysize 11 519,473
Medium chemical  1 12,500
Medium tanker 4 57,698
Panamax 3 212,584
Small chemical 1 4,999
Small products 4 22,654
Small tanker 6 30,376
Suezmax 14 2,200,106
VLCC 16 4,911,639
Grand total 115 12,184,156

The most impressive statistic in 2017 has been the surge in VLCC ordering, which has hit 27 vessels. More orders are expected.

In just one month the order backlog rose from 1,095 tankers (98,259,801 dwt) to 1,129 tankers (103,617,963 dwt). A total of 18 VLCCs were ordered between April and May. Prices have surpassed US$80 million.

There are 135 VLCCs on order. This is 25 per cent of the current VLCC fleet. There has not been a large scrapping programme since the abolition of single- hull vessels at the start of the decade, and the next major cull is expected in 2020.

VLCC ordering anticipates a 2020 scrapping programme
Expected delivery year   Total 2017 2018 2019 2020 2021 2022
vessel type no dwt no no no no no no
Aframax 203 22,086,504 87 80 24 9 3  
Handymax 210 10,196,558 94 59 41 11 4 1
Handysize 148 4,024,078 69 38 32 9    
Medium chemical 42 703,947 20 17 5      
Medium products 25 449,350 16 7 2      
Medium tanker 23 359,134 12 5 6      
Panamax 50 3,668,572 25 23 2      
Small chemical 31 210,490 18 11 2      
Small products 58 370,423 42 16        
Small tanker 87 463,785 58 24 4 1    
Suezmax 117 18,423,073 70 40 7      
VLCC 135 42,662,049 56 42 36 1    
Grand total 1,129 103,617,963 567 362 161 31 7 1
                 

 

Samsung has returned to VLCC construction (it delivered its last vessel of this type five years ago) to concentrate on other tonnage and especially LNG business. BW group broke its long absence with an order for four VLCCs priced at US$83.7 million apiece. The vessels are due for delivery between October 2018 and July 2019. Options are believed to be attached for four more, which can be switched to other vessel types. BW is currently in talks with DH Holdings to take over BW’s existing fleet of 11 VLCCs at a cost of US$538 million, but a rival bid by Frontline is now the subject of a legal hearing.

Capital Maritime & Trading has followed BW by signing a letter of intent with Samsung for four VLCCs and an option for four more. The total contract has been valued at US$650 million. Berth reservations have been allocated. Frontline has placed an order for two VLCCs, with an option for two more, at Hyundai Samho. The vessels are reportedly costing US$79.9 million each. Namura has doubled its VLCC activity by securing an order for two more VLCCs. The other party has not been named, although it is almost certainly Japanese. The contract price is likely to be around the US$85 million mark.

In China, bankrupt Nantong Mingde was taken over and renamed Nantong Xiangyu. The entity will carry on the yard's traditional chemical tanker newbuilding business. Germany’s TB Marine contracted four 22,000 dwt IMO II units, while Hong Kong’s Goldwin Shipping has placed an order for one 38,800 dwt stainless steel chemical tanker with an option for three more. With refund guarantees secured, work will start immediately. The first delivery to Goldwin is scheduled for November 2018. Elsewhere, Avic Dingeng now has 28 tankers on order, 19of which are fully stainless steel.

Chinese yards are gaining a reputation for building high-value tankers of small and medium size. There is a backlog of 96 vessels and the client list reflects a mix of Northern European, Greek and Hong Kong-based interests.

China is gaining a reputation for building higher-value smaler tankers
shipbuilder country no dwt
China 379 32,950,665
Korea (South) 302 41,639,296
Japan 240 18,332,224
Brazil 45 2,191,200
Russian Federation 37 803,045
Vietnam 22 1,026,692
Turkey 21 213,849
Romania 16 1,558,600
Indonesia 15 167,000
Philippines 11 2,700,000
Spain 9 970,000
Croatia 5 244,000
USA 5 152,156
Argentina 4 188,000
Netherlands 4 31,996
Bangladesh 3 11,240
Iran 3 315,000
Azerbaijan 2 16,000
Hong Kong 2 28,000
Pakistan 1 17,000
Singapore 1 6,500
Taiwan 1 40,000
Undisclosed 1 15,500
Grand total 1,129 103,617,963