Using VesselsValue data, Graham Close, Senior Trade Analyst, and George Delaney, Valuation Analyst, explore the spikes in VLCC rates in recent weeks. This article focuses on key variables that have afflicted these vessels over the past few years and have kept market sentiment so low for so long. You can read the full piece here.Supply and Demand”Supply growth over the past year had stayed relatively flat at c. 3.0% to 4.5%; the live fleet stood at 861 vessels in July 2022. However, demand had been volatile; down 8% in June 2021 compared to June 2020, yet up 10% year on year in December. while June 2022 showed a decrease in demand of -3.2% year on year.
COVID-19 had significant effects on supply and demand with June 2021 and 2022, showing an overall decrease in cargo mile growth. That seen in June 2021 was a result of the movement of 222 million barrels of oil into floating storage by July 9, 2020 (According to EIA figures), driven by a crash in the oil market…”
Newbuild and Demolition”Cargo miles in 2021 ranged from 18.5bn MT-NM to 21.6bn MT-NM compared with 2022 where it ranged from 18.7bn MT-NM to 22.2bn MT-NM. The combination of oversupply and lacklustre oil demand from China had aided the extended periods of negative earnings seen and forced market participants to think twice about contracting VLCCs with builders. Likewise, the skyrocketing price of raw materials for shipbuilding has increased newbuild values significantly; which currently stand c. 16% higher than this time last year at around USD 115.51 mil…”
