Any tanker owner ordering a VLCC today needs to be confident his or her new ship can earn more than $30,000 a day for its lifetime, something not possible in recent times.
According to analysis from tanker broker Poten & Partners the price of a standard VLCC has increased to $115m, the highest level recorded since 2009.
“At $115 million for a standard VLCC, an owner needs on average about $33,500 per day for the next 20 years after delivery to break even on the investment. Given where earnings have been in recent years, this requires quite a leap of faith,” Poten stated in its most recent weekly report, something the New York brokerage said was all the more tricky as tanker shipping is no longer considered a “growth” industry.
The VLCC orderbook is down to 6.5% of the fleet, while 19% of the VLCC fleet is at least 18 years old, Poten data shows.
“If oil demand recovers and scrapping returns to normal levels, our industry is likely to face a capacity crunch in the next few years. This could lead to a significant boost in tanker earnings,” Poten concluded, pointing out that available yard slots for VLCCs are now only possible deep into 2025.