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Tanker second-hand vessel prices near record highs
The Clarksons Secondhand Tanker Price Index currently stands at its highest point since 2008 according to Clarksons Research. The Tanker Price Index at the end of Feb stood 98% higher than start 2021 levels, also 87% higher than the 2019 pre-Covid average, as strong markets and highly capacity constrained shipyards have supported the secondary market.
Furthermore, Clarksons highlight the 2-year returns profile of a VLCC outlining that an initial investment of USD 70m has generated an approximate USD 26m in earnings (after OPEX), and USD 30m unrealised gain in asset value appreciation. Therefore, investors have realised a 2-year return of around 80% (USD 56m return on USD 70m investment).
“Houthi’s to continue vessel attacks despite US calls for Israel – Palestine ceasefire”
In recent months the conflict in the Red Sea has contributed to greater industry ton-miles as vessels divert around the Cape of Good Hope to avoid the conflict zone. Over the weekend the US Vice President Kamala Harris called for a temporary ceasefire of the Israel-Palestine conflict; however, at the same time, the Houthi’s leader Abdul Malik al-Houthi announced, “Our military operations will continue and advance, and we have surprises that our enemies will not expect at all”, a clear signal that shipping disruptions are set to continue.
The ongoing supply/demand fundamentals have been reflected in the second-hand vessel market, with new record prices for a second-hand Suezmax vessel set last week at around USD 99m.
Aframax ECO, 12 months TC
Aframax, Average spot
Suezmax ECO, 12 months TC
Suezmax, Average spot
Source: Clarksons Research
Bulk rates soar under strong demand.
Capesize rates surged higher again last week, continuing the previous week’s momentum. Fleet weighted average earnings rose by 30% week on week as the market saw strong demand from both the Atlantic and the Pacific. Capesize rates are now at their highest level since their mid-December surge and significantly above the 2023 average rates.
“Capesize rates reach highest levels since mid-December”
Panamax and Handy markets were more mixed, as Panamax markets saw stronger demand in the Pacific somewhat offset by weaker demand in the Atlantic. Handy demand was weaker in the US Gulf, while improving in the Mediterranean.
Capesize, 12 months TC
Kamsarmax, 12 months TC
Source: Clarksons Research
China vehicle export growth continues rising.
The expected growth of electric vehicle (EV) exports from China will be driven both export growth of Chinese brands such as BYD, which recently rolled out plans for a big expansion of car exports, but also, from Western brands with factories in China. For example, General Motors is expected to commence sales of the Cadillac Lyriq in Europe, a new EV produced in China, while MG looks to increase its European sales to more than 300,000 in 2024 from 232,000 in 2023, with all sales to Europe serviced via production in China.
The effect of ongoing strong vehicle exports from China is continuing strong PCTC rates. The strong rate environment is also supported by the ongoing conflict in the Red Sea seen by the severe drop in PCTC transits through the Suez Canal as per the graph below.
5000 CEU – 12 months TC
6500 CEU – 12 months TC
Source: Clarksons Research
| Type | Tons | + /- | ||
|---|---|---|---|---|
| VLCC | ||||
| Suemax | ||||
| Aframax | ||||
| MR |
| Type | Resale | 5y | 10y | |
|---|---|---|---|---|
| VLCC | ||||
| Suemax | ||||
| Aframax | ||||
| MR |
| Type | Tons | + /- | ||
|---|---|---|---|---|
| Capesize | ||||
| Panamax | ||||
| Supramax | ||||
| Handysize |
| Type | Resale | 5y | 10y | |
|---|---|---|---|---|
| Capesize | ||||
| Panamax | ||||
| Supramax | ||||
| Handysize |
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