Secondhand Crude Tankers in High Demand

Crude market sparked considerable interest in 2014 with 170 crude tankers of a combined 35.7m dwt reportedly sold, more than double the volume of crude tonnage sold in 2013, Clarksons reports.

Rise in crude sales volumes has been attributed to increased interest in larger tonnage, with 47% of crude sales accounted for by VLCC transactions, which totalled 79 units.

These sales included two large fleet acquisition deals. In January, Euronav purchased Maersk’s 14-strong VLCC fleet and in October, China VLCC bought 17 VLCCs from Nanjing Changjiang. These two deals accounted for 18% of the crude tankers sold in 2014, according to Clarksons.

Even excluding these two large deals, there were a record 139 crude tankers sold in 2014, including 37 Suezmaxes and 48 crude Aframaxes; relatively high levels historically. Suezmax sales more than doubled from 17 vessels sold in 2013 and represented the highest level since 2005, when 39 were sold.

“However, significant sale and purchase activity in the crude sector did not spill over to the products sector, where sales fell 9% y-o-y to 150 units, dropping below crude tanker sales for the first time on record. Overall liquidity in the crude tanker sale and purchase market rose in 2014, with 9% of the fleet sold during the year, up from 5% in 2013,” the UK market research firm said.

In terms of reported value, a total of USD 7bn was spent on secondhand crude tonnage in 2014, outstripping the estimated USD 6bn of newbuild investment.

“Secondhand investment has typically been exceeded by contracting in recent years, and the reversal of this trend last year was partially a result of a large volume of relatively young VLCC tonnage being sold, with the average age of the VLCCs sold in 2014 standing at 6 years, compared to 8 years in 2013,” Clarksons said.

In terms of contracting, 84 crude tankers were reportedly ordered, up from 65 in 2013. However, 67% of the total number of crude tankers purchased or ordered were accounted for by secondhand sales in 2014, up from 56% in 2013 and approximately 30% in 2006-10. Whilst contracting rose in 2013 and 2014, it was outstripped by annual secondhand activity for the fourth consecutive time last year, the firm pointed out.

Source: Clarksons