Very large crude carrier (VLCC) newbuildings have dominated the tanker ordering space in the first four months of 2021 with 32 units of 9.6mdwt, Simpson Spence Young (SSY) said. But newbuilding prices, which have steadily risen since the last quarter of last year, could stem the order flow, the world’s largest independent shipbroker added, as per Trade Winds.
A very large crude carrier (VLCC) with a length of some 330 metres (1,100 feet), has capacities between 200,000 and 320,000 dead weight tonnage (dwt). Deadweight is the total weight of cargo plus such necessary supplies as fuel, lubricating oil, crew, and the crew’s life support. A VLCC takes up to 2 million barrels of crude oil per shipment.
According to another shipbroker, Greece-headquartered Intermodal, during the first quarter of this year around 25 VLCC orders were placed whilst all of them were in Korean shipyards, the highest figure since Q2-2015 when circa 30 vessels were ordered. Compared to Q1 2020, the figure is around 4 times higher while it represents around 60.0% of the total annual placed orders during 2020. “VLCC orders placed during 2021 up to date, were contracted for account of Greek, Korean, Malaysian and US based buyers, with Greeks holding a proportion slightly less than half of the total” Hellenic Shipping News quoted Mr. Mohamed Rabie, Intermodal’s research analyst as saying.
VLCCs are commonly called “supertankers.” These are always crude-oil carriers, usually plying routes between large producing areas such as the Persian Gulf and major markets in Asia, Europe, or North America. Their main role is to transport crude oil from production point to refinery, although they are also sometimes used for storing crude oil post production.
Construction of crude oil tankers takes 9 to 15 months from the time the keel is first laid. Over the last ten years the cost of a new VLCC has ranged from around USD 80 million to USD 160 million. The economic lifespan of an oil tanker has historically been 25 years, although more recently this has dropped closer to 20 years.
After tumultuous trading conditions in 2020, where tanker rates accelerated to multi-year (and on some routes record) highs before rapidly plunging, 2021 is set to be a challenging year for the tanker market, according to SSY’s 2021 Outlook published in January.
“It will grapple with crude production changes, still high oil inventories, refinery closures, a new US government and potential foreign policy shift, an overhang of tonnage after low scrapping in 2020, and of course how oil consumption continues to recover following the Covid demand destruction” the London-headquartered shipbroker which operates from 21 offices across the globe said.