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SSY: economic crisis may be 'good news' for tanker owners

London: The financial turmoil in the global economy may cut back the number of newbuilds to make their way onto the market and revive tanker rates, suggests Simpson Spence & Young (SSY). Tankerworld quotes an SSY spokesman as saying that the current financial crisis meant that here were "legitimate reasons to believe there will be some non-delivery of tankers ordered."

Statistics released by the company had shown "massive ordering, with the dirty tanker orderbook rising to nearly 166 million dwt, or 45% of the existing fleet. Many industry players had warned of the negative impact on rates as the newbuilds entered the market.

Overseas Shipholding Group, Inc CEO Morten Arntzen told Reuters that many tanker operators were funding their operations using retained equity because "debt isn't available" to buy new ships.

"This will lead to a number of cancellations (of ship orders). Some Greenfield shipyards won't get built or will end up in trouble," said the head of the world's second largest listed tanker company. He added that these order cancellations "should further improve the balance between supply and demand and favour companies such as OSG."

Louisa Follis, a general manager with SSY Research, said "credit drying up is good news for owners in the long run. It reduces the fleet order-book at a time when an over supply of tonnage threatens the market," she added at last month's Energy Shipping conference in Singapore.

Follis was speaking in an otherwise gloomy discussion about prospects for the industry on the back of a credit squeeze. "If rates come under severe pressure, there is still a release valve...and that's the amount of single hull tonnage," she said.

According to Follis, during a major downturn in the market, "there is a lot of single hull tonnage that can be removed from the fleet to help the situation for owners."  [10/10/08]

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