Nordic American Tankers Ready for Different Market Outcomes
Nordic American Tankers has set out strategies for both a strong future tanker market and a weak one, saying that if the market improves, higher earnings and dividends can be expected, and if the rates remain low, the company will be in a position to buy secondhand vessels or newbuildings.
The development of the world economy affects the tanker industry, the company says in their 3Q financial report. Seaborne imports of crude oil into the US have decreased over the recent past. Going forward, shale oil and tar sand oil projects are expected to affect the U.S. and Canadian oil sector. These projects are vulnerable to reduced oil prices. In terms of transportation work (ton miles), the reduced imports to the U.S. are more than outweighed by the increased imports to the Far East. European economies continue to run significant fiscal deficits. The economies of the Far East generally show continuing growth, although at a slower pace than before.
Tanker market rates are affected by newbuildings that enter the markets, increasing the supply of vessels. Scrapping impacts supply in the other direction.
The Suezmax fleet (excl. shuttle tankers) counts 445 vessels at the end of Q3 2014, meaning the fleet has decreased this year.
Following a number of orders made in recent months, the current orderbook stands at 54 vessels from now to mid-2017. This represents about 12% of the Suezmax fleet. In 2009, the orderbook was over 50% of the existing fleet. The orderbook for the remainder of 2014 counts nine Suezmax vessels. However, North American Tankers expect the real number of deliveries for the rest of this year to be lower. Five Suezmax vessels were delivered in the first nine months of 2014.
So far this year five vessels have been scrapped. In 2013 six Suezmaxes were scrapped compared to 21 in 2012 and eight during the year 2011.