The scarcity of newbuild tankers this year combined with a widely predicted growing demand for floating oil storage is seeing rates flipped around.
Just 27 new VLCCs have been delivered this year with another 17 slated to hit the water before the end of the year, contrasting significantly with the 68 VLCCs delivered from Asian yards in 2019, according to data from Alphatanker, which has looked at floating storage options in its latest weekly report, noting that access to a clean VLCC is becoming difficult.
“This scarcity has been reflected in hire rates with newbuild VLCCs now commanding a hefty premium of up to $10,000/day versus units already trading. This is the opposite of last year when newbuild units were being hired at a discount to market rates due to their lack of certification and approval with IOCs,” Alphatanker noted in its latest report.
Overall, despite many tanker bulls suggesting the sector is about to reap the benefits of another floating storage surge, Alphatanker analysts think the trend seen earlier this year has peaked.
“[W]e expect oil already held at sea to continue to be gradually wound down over the coming months,” Alphatanker predicted.
Data provider Kpler shows that there are currently 127m barrels of crude idled at sea, down by nearly a third from its historic high reached on July 4 as much of the world exited coronavirus-linked lockdown.