Tanker owners, as reflected in global market share, prefer South Korean shipyards for their ordering, as opposed to Chinese ones, despite the fact that a few months back, it was China which surpassed South Korea as the world's leading shipbuilder. To do this, China adopted an aggressive pricing policy, together with the massive development of green field yards. As shipbroker Gibson noted though, today, according to report, as many as half of China's shipbuilders are likely to go out of business over the next two to three years.
"Currently China’s slice of the global tanker orderbook represents 38%, still some way behind South Korea with 47%. However, Korean shipbuilders have the technical edge and are therefore able to build higher quality vessels to the higher specifications required by owners today. With new orders difficult to secure, Korean yards may be better placed to survive today’s difficult market. This is reflected in the fact that Korean yards have taken 55% of all new tanker orders placed so far this year. As demand for Eco ships or more specialised tonnage takes off, it is Korean yards which are likely to benefit the most. Good packages are available for those that are looking into these initiatives" said the London-based shipbroker in its report.
It added that "of course the current state of the tanker market is doing little to support the shipbuilding industry, but with shipyard prices remaining on a downward path, this could prove too tempting for some owners. Newbuilding prices for most types of tanker have fallen by about one third since the beginning of 2008. New orders placed during the 1st half of 2012 indicate that we are likely to exceed last year’s total, although 2011 was an exceptionally low year for ordering of all types of ship. Firm orders for 52 MRs have so far been placed this year, already exceeding yearly totals of the last 3 years. Perhaps not surprisingly Suezmax ordering has shown the largest decrease with just 3 orders placed this year. Investment in new tonnage is always associated with high spot earnings. At present the tanker market is firmly entrenched in the doldrums which appears to have placed the lid firmly on a fresh wave of tanker demand even at today’s prices. Ordering over the summer months is likely to remain at low levels as will spot earnings. However, what we don’t need is a fresh round of speculative orders towards the end of the year when the tanker market is expected to pick up ahead of winter demand" concluded Gibson.
Meanwhile, in the tanker market this week, in the Middle East, "the drip feed of enquiry continued to suppress Owners' sentiment this week on the VLCCs in the AG, however the bunker price was always going to prove influential as it ticked up by $40/ton over the course of 5 days. Owners are now looking to correct the rate upwards on the back of this but the rates will be pinned back by the amount of tonnage available with 280 x w24 West and 270 x w34 East currently last done. Suezmaxes saw a larger than usual amount of enquiry West at the start of the week which eroded the list up until the first few days of August. The second half of the week proved to be a quieter affair and Owners will now be hoping to retain some momentum but it looks to be proving futile with 140 x w42.5 West and 130 x w75 East. Aframaxes were hoping that the tight position list in the Far East might be felt in the AG, but the list here is too full for that to be seen and a sideways direction at 80 x w92.5 for AG/East will only be improved upon by the aforementioned bunker price" said Gibson.
In West Africa "the Suezmaxes started reasonably but look to have ended this week on a very quiet note and will hope to reconfigure for next week. The damage has been done though, and Owners will have to start from scratch with 130 x w62.5 being done for all west options and around 130 x w72.5-75 for east likely to be obtainable. Western units are not so ample now on the VLCCs in West Africa so you would think this would see an improvement in cargoes heading west, but even Eastern ballasters are now entertaining these alongside the usual Eastern enquiry. In turn, this influence from the ballasters will continue to be felt next week with 260 x w41.5 west and 260 x w37.5 East" Gibson noted.
In the Mediterranean, "Suezmaxes were hoping for a bit more activity than was realised and rate adjusted suitably to this let down. Early stems commanded premiums, but on the whole, the market has finished in a similar fashion to their West African cousins, and next week will involve a bit of rebuilding with Black Sea/ Med going at around 140 x w70. There was a midweek flurry of activity on the Aframaxes, but it wasn’t enough to change the status quo and rates continue in the doldrums at 80 x w82.5 for cross Mediterranean" it said.
Finally, in the North Sea, "the Aframaxes have followed a similar pattern to what has been alluded to above and rates have made a very slow and minimal decline to around 80 x w85 for cross UKC and there needs to be a dramatic turnaround in events to change the current situation next week. VLCCs were called into action for arbitrage-driven enquiry at the end of last week and the start of this, but it was shaky to start with and Owners have had to discount down to $3.3m to be in contention, but even these levels don’t provide a guarantee of working and maybe a little less might be needed next week" Gibson concluded.