Modest contracting levels, a relatively low order book, demand growth and IMO 2020-induced dislocations are all factors that could lead to a stronger tanker market in the months ahead, according to New York broker, Poten & Partners. In its latest weekly report, the firm reported that only 61 tankers of all sizes were ordered in the first six months of this year, the second lowest tally since 2011. Only the first half of 2016 was lower, when 24 tankers were ordered, but this followed heavy contracting of 503 new tankers in the corresponding period of 2015.
High ordering levels in that year led to tonnage oversupply and persistently weak rates that have plagued the market since then, Poten said. However, modest contracting recently could now set the scene for a more balanced tanker market.
Contracts for VLCCs have declined the most: only 14 new units were ordered during the first half of this year, compared with 35 in 2018 and 31 in 2017. A significant number of older VLCCs – 33 – were sold for demolition in 2018, although this has fallen to just four in the first six months. This sector still has the largest orderbook comprising 90 vessels representing 11.2% of the existing fleet, according to Poten, although some of these tankers were ordered in 2014/15 and may now never deliver. “The overall outlook for supply growth is relatively bullish,” Poten said. “A normal winter market combined with some IMO 2020-induced dislocations and demand growth can lead to significant rate improvements.”