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Sunday, December 17, 2017

Suezmax fleet and market

Johan G Olsen’s (JGO) latest suezmax review lists 372 ships together with an orderbook of 129. There are 61 single hull (SH) suezmaxes [including double bottomed (DB)/double sided (DS)] with 18 suezmaxes of 20 years or older among them. Fourteen of the suezmaxes listed are OBOs and five are used for storage and will never trade again. As many as 48 of the suezmaxes have been recorded as shuttle tankers, most of which are operated by Norwegian-based operators.

 

Some 78 of the suezmaxes are fixed to 2009 and beyond and 106 are oil company/state owned.  This leaves 187 suezmaxes in the spot market.  Five of the suezmaxes listed by JGO are old tankers used for permanent storage that will never trade again.

 

 

Continuing a steady trickle of suezmaxes being sold for conversion in 2005 and 2006, we have recorded 9 suezmaxes so far sold for conversion in 2007. One has been sold for conversion to an ore carrier, 2 for conversion to FPSOs and 6 for heavy lift conversion - 4 of which appear to be still in the oil market. One suezmax has been sold for decommissioning. Since 1 January 2001, there appear to be a considerable number of suezmaxes that have been removed from the market despite significant fleet growth.

 

Year

No suezmaxes*
1 Jan.

Increase

Deliveries**

Removals***

2001

284

-4.23%

16

-28

2002

272

2.57%

24

-17

2003

279

3.58%

25

-15

2004

289

3.81%

25

-14

2005

300

7.33%

25

-3

2006

322

6.83%

26

-4

2007

344

5.52%

25

6

2008

363

3.03%

21

10

2009

374

10.70%

55

15

2010

414

 

32

 

Total

 

 

274

168

*Source: Fearnleys Review **Source: LRF/JGO ***Calculated/projected

 

The deliveries scheduled for 2007- 2009 will most likely create a surplus of suezmaxes in 2009/10. This surplus will not disappear before 2011/12, even if all SH suezmaxes are phased out by 2010 and assuming a 4.5% increase in demand annually. However, it is likely that some suezmaxes will trade on after 2010 until the age of 25 years, or maximum 2015, as 37 of them will be 20 years or younger in 2010 - and there will probably be niches were they can continue to trade. 

 

However, if we assume that all SH suezmaxes will be taken out of the market by 2010, and if we assume a balanced market end 2006, then no new deliveries will be needed before 2012 to maintain a balance in the market under these assumptions.

 

It is also assumed that there will be 25 removals of SH tankers before final phase-out in 2010, in addition to the 5 scheduled for before 2010. There would need to be a trade increase of more than 6% before more deliveries than those already scheduled by 2010 are needed (to maintain market balance). However, with such a 6% increase there would be a temporary deficit of tankers in 2008.

 

 

Some 78 suezmaxes are owned by oil companies and state-owned companies.

 

The four biggest suezmax owners in Johan G. Olsens’ book are Frontline (19), Tanker Pacific (16), Konig and Kundsen OAS (14 each).

 

The biggest owners of single hull suezmaxes are:

Owner

No. of  SHs

Tanker Pacific

16

Frontline (6 of the SH S’maxes were sold for heavy-lift conversion)

9+2DS

Ocean Tankers

8

Chinese Petroleum

4

Others

27

Total SH (including DS)

63

 

Freight rates so far in 2007 have been very volatile but the average has almost equalled the average for 2006. Typical suezmax trades from West Africa and from the Mediterranean increased in 2006 and are set to increase also in 2007. The export of Azeri crude oil through the BTC pipeline to Ceyhan is projected to reach one million barrels per day in 2007.

 

 

Some 51% of the suezmax fleet is in the spot market. The number of recorded period contracts peaked in 2005 with 23 contracts. We recorded only 18 in 2006 but there have been 13 so far in 2007. Average freight rates are at an all time high.

 

 

Contact: Erik Ranheim