Nov. 9, 2017
Through the first 10 months of 2017, tanker contracting activity has increased relative to last year as through the same period of 2016 we recorded 109 vessels ordered, while this year we have seen 165 tankers place on order. Year-to-date, the bulk of ordering activity has been on the dirty side with 47 VLCCs, 18 Suezmaxes and 25 Aframaxes, while no Panamax newbuildings have been ordered. On the clean side, we have witnessed about 75 newbuilding contracts, 12 LR1s, 52 MR2s and 11 MR1s.
Contracting activity still pales in comparison to 2015, when the market was booming and 267 vessels were ordered through October. We are now feeling the impacts of this spate of ordering in the form of an oversupplied market and depressed freight rates. October 2017 represents an interesting month as no vessels (DWT: >27,500 mt) were placed on order, despite the current low pricing of assets. The lack of contracting on Panamax tonnage both clean and dirty illustrates the focus of these vessels within niche markets as well as the reduction of shipyard capacity offering such builds. We note that the increase in ordering this year has expanded our expectations for vessel deliveries over the coming years with risk pointing to more ordering activity given the current position of asset prices.