VLCC newbuild orders forecast to return in 2024

In its weekly report Poten noted that the VLCC orderbook was at a near historical low of 23 vessels, or 2.6% of the trading fleet, as of 1 January 2024.

The orderbook for VLCCs is much lower than the Aframax/LR2 and Suezmax sectors which stand at 12.7% and 9.9% respectively.

Poten notes unlike the their smaller brethren the VLCC sector did not get a major boost from the Russian invasion of Ukraine nor, so far, the Red Sea crisis.

However Poten thinks the situation will change this year, and notes newer container ship and LNG carrier orders have opened up yard slots – the two sectors that have dominated the newbuilding market over the last couple of years.

“However, most of all, major VLCC owners are looking at the extremely low orderbook and decided that the oil market needs more than a handful of VLCC deliveries every year.  And once a few high-profile owners take the plunge, we expect that more will follow,” the report said.

As a result it expects the VLCC orderbook to double this year. It is worth noting in terms of the market it will take several years for new orders placed in 2024 to impact the demand – supply balance of VLCCs.

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Meanwhile tanker recycling, which is also a low, is expected to increase in 2024. According to figures from Lloyds List Intelligence just 14 tankers over 10,000 dwt were sent the breakers yards in 2023 – the lowest level for 20 years.

Related:Euronav takes up VLCC newbuild option

With an aging fleet this is again a situation that Poten expects will change in 2024.

“EU scrutiny on secondhand sales as part of a new set of sanctions on Russia could make owners more reluctant to sell ships to unknown buyers.  However, more importantly, we think the dark fleet has reached a level where it is big enough to service the sanctioned trades,” the report said.

Poten expects the number of tankers recycled in 2024 to reach at least 50 units, a similar number to the 57 scrapped in 2022.