Okeanis says tanker supply picture may be 'most bullish' in history
Short newbuilding list and production recovery set the stage for tightening markets from 2022, Greek VLCC owner says.
Oslo-listed Okeanis Eco Tankers has made its case for a tightening market in 2022, as it called the low newbuilding orderbook "perhaps the most bullish in tanker history".
The Greek shipowner, controlled by the Alafouzos family, pegged the level of VLCCs on order at 7% of the world fleet, the lowest since the mid-1990s.
And it pointed out that there is a high scrapping potential, with about 30% of VLCCs and suezmaxes over 15 years old.
In a company presentation, Okeanis said appetite for ordering is low due to a "lack of clarity on environmental regulations, lack of access to financing and high market uncertainty".
The shipowner admitted that the short-term outlook is challenging for tanker demand, but with pockets of strength.
The unwinding of floating storage deals is a potential headwind as ships return to the market, while oil production and exports are down, but growing.
But Okeanis said the imminent destocking cycle will be different to 2016, because that coincided with the delivery of a "massive orderbook."
Now, however, fleet growth will be flat to negative over the next two years, the shipowner believes.
"Older ships are severely handicapped in [the] spot market and do not compete for [the] same cargoes as our modern ships," Okeanis said.
These vessels resort to "niche trades" with low utilisation, the company added.
Okeanis views 2021 as "mediocre" currently, but the low orderbook and "anaemic" fleet growth are preparing the ground for a fundamental tightening of tanker markets between 2022 and 2023.
Last updated 15.9.2020, 17:26
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The Greek shipowner sees production beginning to increase from the third quarter. "Right now could be as bad as it gets," the company said.
But production and exports may only rise meaningfully in the second half of 2021, the shipowner added.
Okeanis is forecasting inventories to decline by an average of 1.8m barrels per day from now to the third quarter of next year.
The oil market will be fully rebalanced by then, "setting the stage for strong tanker market recovery", the company said.
Okeanis has pledged to sell ships at the right price from 2021, to return cash to shareholders.
Smaller and newer
In three years time, the company sees itself as operating a smaller and more modern fleet.
"We are cash generative even in the most pessimistic rate scenario due to our charter portfolio," Okeanis said.
Any sales will also reduce its debt levels.
On Monday, another Oslo-listed tanker owner, Hunter Group, bagged a VLCC term charter at an attractive rate as spot levels continued to recover.
The Oslo-listed company, backed by investor Arne Fredly, said the 300,000-dwt Hunter Disen (built 2020) has been booked by an unnamed charterer at $38,000 per day for between five and seven months.
Brokers are expecting continued good momentum for VLCC rates as the October loading programme gets going.
Clarksons Platou Securities counted 20% of the VLCC fleet inactive on Monday morning.
About 90 ships are in floating storage, little changed since May.