Tanker Deliveries vs. Scrapping Potential

Given the orderbook, the tanker market is expected to experience ample supply growth in the coming years while the forecasts for tanker demand growth are rather subdued, according to Poten & Partners.

News ID: 70305

Date: 11 December 2016 - 10:43

In recent years, tanker sales for scrap have been“few and far between,”while the average age of tankers that are sold for demolition is well above 20 years.
Under the scenario of fixed scrapping age of 20 years, the orderbook for most segments well exceeds scrapping over the next two years, through the end of 2018.
The segments that appear the most worrisome are the VLCCs and Suezmaxes. Even under this scrapping scenario, the scheduled deliveries in these segments are almost double the demolition numbers.
The numbers for the large product tankers, LR1 and LR2, don’t look encouraging either, Poten & Partners said. The Aframax crude tanker fleet will likely stop growing in the next few years, while the dirty Panamax segment is already shrinking as owners opt to build coated vessels to give themselves more trading flexibility and take advantage of the growth in long haul product movements.
For MR and Handysize product tankers, the numbers look more encouraging, although a 20-year scrapping age is quite optimistic for these vessels, as smaller product carriers typically trade well beyond 25 years of age.
“The expected fleet growth may not be as disastrous for the market as it appears at first glance, if we continue to experience healthy growth in tanker ton mile demand, and if scrapping will pick up in the next few years,” Poten & Partners said, adding that“these are obviously ‘Big Ifs’.”