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Tuesday, December 12, 2017

Sale and purchase

Nearly every day we read about poor results for tanker owners.  The current freight market does not in general cover owners' costs.  One way to keep a cash-strapped company going is, of course, to sell assets. 

 

Figures for year 2011 projected from actuals in first 8.8 months

 

But the S&P activity has been quite moderate so far in 2011 and appears to be declining compared to 2010 for all segments, except for tankers 60,000-120,000 dwt. Buyers appear to be waiting for prices to fall further and owners seem not to want to sell below book value.

 

Recorded VLCC 2nd hand sales including newbuilding re-sale

Year

Average Price

(million USD)

Average Age

(years)

Number of transactions

2002

27.5

15.1

29

2003

41.2

10.8

44

2004

57.4

10.9

84

2005

93.2

8.6

37

2006

79.6

10.5

40

2007

63.3

13.8

48

2008

82.7

12.2

32

2009

35.5

14.6

35

2010

48.7

11.9

57

2011*

66.3

10.1

36

Grand Total

59.4

11.6

390

                         *Projection based on 8 months

 

Regarding VLCC sales so far this year, there have been fewer sales but the average age of the tankers sold has been lower (10.1 years) and the average price higher than in previous years.

 

The only segment that has actually shown an improvement in freight rates is the MRs. The average price obtained for tankers 30,000-60,000 dwt so far in 2011 has been USD 20.2 m (35 sales and average age 9.9 years) down from USD 23.6 m in 2010 (71 sales and average age 6.1 years) and down from USD 43.9 m in the peak year 2007 when we have recorded 89 sales (average age 5.5 years) in this segment.

 

Several owners are reported to be on the lookout for good bargains. If the low freight market continues, this may happen. There will be many deliveries of new tankers also in 2012 and the demand is not set to increase.  This means that the surplus of tankers may continue to build up for another couple of years.

 

Contact: Erik Ranheim