Despite constant headlines pointing to VLCC demolition activity, shipbrokers Gibson says that history could be repeating itself in the tanker market.
Gibson observes that despite more tankers being scrapped, owner optimism may be misplaced as many of the vessels being scrapped have been involved in floating storage while others showed little sign of recent trading activity.
In 2017, a total of 57 new VLCCs were ordered and another 24 firm VLCC orders have been placed in 2018 already. VLCCs now have the largest orderbook of all tanker segments sitting at 16% relative to its existing fleet, and 40 VLCCs are scheduled for delivery this year and 57 due to deliver in 2019.
Gibson says with the approaching 0.5% global sulphur cap on bunkers in 2020 approaching, it may lead to speculative ordering from investors with limited or no exposure to the shipping industry.
The combination of low newbuilding values, new technology and the pick-up in demolition is an attractive story to sell to investors, Gibson says, pointing to recent orders by Norwegian investor Arne Fredly and Guggenheim Capital as a possible sign of the return of private equity and hedge funds to the sector which could see a surge of orders flood the market in a similar fashion to the 2013-2015 period.
