Using VesselsValue data, George Delaney, Cargo Analyst, has analysed the trends and changes across the VLCC and LNG markets in 2021. This report provides data on the background of each vessel type, assesses values and the S&P market, looks at the fluctuating scrapping numbers, as well as positive newbuild orders for the VLCC and LNG fleets. George also provides commentary on the future of both vessel types in line with the global push for green energy.
VLCC
“Since April 2020, the VLCC earnings market has remained at low levels due to a high supply of vessels and a steady demand for oil. The TD3C-TCE (VLCC spot earnings) reached a low of -6,779 USD/Day in March 2021, as VLCC and other crude carrying sectors simply lacked the consumer demand for oil.
A five year old generic VLCC saw its value drop from USD 75.39 mil in 2019 to USD 62.47 mil in 2020, a startling decrease in value of 17.1%. The constant threat of Covid-19 outbreaks, particularly following the emergence of the Delta variant, has kept many major economies in flux. However, with the pandemic seemingly waning, VLCC values have risen. That same generic five year old VLCC has seen its value increase by 14% from USD 62.47 mil to USD 71.57 mil from this time last year, shown in Figure 1…”
Figure 1: Changes in 5 year old VLCC values since the beginning of 2020.
LNG
“As with VLCCs, increases in earnings led to increases in values for these vessels. Figure 2 shows that in 2020 a generic five year old Large LNG vessel was worth USD 131.31 mil, but in 2021 this has grown to USD 152.74 mil, a 16.3% rise.
These record earnings and values come amid an ongoing global energy crisis. A perfect storm of unreliable renewable energy sources, diminishing supply of LNG from the globe’s largest producers, and freezing conditions that left European reserves diminished has resulted in the price of LNG soaring. Germany’s reluctance to approve the Nord Stream 2 pipeline from Russia, only further encouraged the price rise in Europe…”Figure 2: Changes in 5 year old Large LNG values since the beginning of 2020.
Figure 2: Changes in 5 year old Large LNG values since the beginning of 2020.