Falling oil prices may boost the recovery of the VLCC shipping market.
2014-12-15 09:00
China's largest independently researched, designed, and built oil tanker ( ship type shipyard transactions —320,000-ton Very Large Crude Carrier (VLCC) "Kai Gui"
Some analysts point out that the recent record low in international oil prices, considering the rise in oil tanker freight rates and the lower order book compared to capacity, will lead to a significant increase in demand for new VLCCs, signaling a recovery in the merchant ship construction market.
According to Shipbuilding and Ocean Daily news, Park Moo-hyun, a researcher at Hana Daetoo Securities in South Korea, stated that from 1981 to 2005, oil prices remained at $20-30 per barrel, and during the same period, the annual growth rate of seaborne crude oil transport was around 2%; in 2008 and 2009, international oil prices exceeded $100 per barrel, while the annual average decrease in seaborne crude oil transport was 3%. Recently, with the decline in oil prices, seaborne transport volume and the seaborne ton-mile transport volume of crude oil and refined oil have increased accordingly.
Researcher Park analyzed that under the condition of declining oil prices, VLCC freight rates show an upward trend. In comparison, the VLCC order book only accounts for 15% of the shipping capacity, the lowest level since 2002. The demand for seaborne crude oil transport exceeds the supply of ships, therefore, the demand for new VLCCs will further increase.
Researcher Park stated that historically, the order volume for new VLCCs has shown growth, and the overall newbuilding market for merchant ships has also improved accordingly. Due to the characteristics of the VLCC ship type, its construction requires a large shipyard dock, which plays a role in pushing up the prices of other ships.
He also stated that considering that the daily freight rate of an environmentally friendly VLCC can earn an additional $15,000, the new ship market undoubtedly shows a "green light".
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