Seatrade Maritime is part of the Informa Markets Division of Informa PLC

This site is operated by a business or businesses owned by Informa PLC and all copyright resides with them. Informa PLC's registered office is 5 Howick Place, London SW1P 1WG. Registered in England and Wales. Number 8860726.

Sunnier times for tanker owners

Sunnier times for tanker owners
So 2014 proved to be a rather better year for the crude tanker market than recent years with earnings in the VLCC, suezmax and aframax sectors considerably higher than the previous year.

VLCCs earned an average of $27,315 a day, according to Clarkson Research figures, the best since 2010. Suezmaxes earned an average of around $28,000 a day, the best since 2006, while aframaxes earned nearly $25,000 a day, thanks to earnings of nearly $80,000 a day in January in a volatile market. All three sectors have made a strong start to 2015. Lower fuel costs towards the end of the year have, of course, played their part in improving earnings.

According to London broker EA Gibson, at these levels a VLCC newbuilding ordered two years before, earned an average of a $6,750 a day contribution to cashflow after opex and debt service, a suezmax $9,500, and an aframax a healthy £9,500. Because of the massive drop in newbuilding prices during the recession, such a VLCC would be competing with a newbuilding ordered in 2008 that would require $32,750 a day, on the same basis, to break even.

Gibson points out that the drop in oil prices coupled with OPEC's decision to maintain output has provided short term support for the tanker market, despite slowing oil demand growth, persistent low oil prices will discourage investment in higher cost fields. On the other hand low prices could stimulate oil demand, which barely grew 0.7% last year.

Supply growth also slowed in 2014 with the VLCC fleet growing by 12 vessels, and the suezmax fleet by just three which prompted orders for 48 suezmaxes in 2014 while the aframax/LR2 fleet actually contracted by seven vessels. The orderbook remains substantial with 12-15% of the three fleets still on order, the major part of that for delivery 2016 and subsequently.