A Look at VLCC Newbuilding Pricing

Aug. 5, 2022

Our model used to forecast newbuilding asset prices relies upon a multi-variate approach including a McQuilling-developed forward steel index, prevailing and projected market earnings, as well as yard capacity and long-term interest rates.  The advantage over traditional methods of correlating asset prices to earnings is that the model can explain to a reasonable degree situations where newbuilding prices may be performing differently than earnings would suggest, which have a much better correlation to secondhand prices.  This was perhaps never more evident than the last 18 months, as newbuilding VLCC prices continued to trend higher from commodity inflation and exuberant ordering ...