Shipowners will generate strong competition in the secondhand market as they seek to acquire tankers and bulkers, SSY sale-and-purchase boss Toby English believes.
In the London shop’s 2024 outlook report, the broker revealed “bullish” expectations for 2024, in terms of S&P and newbuilding orders.
“With demand still very strong for modern eco tonnage across all sectors, as well as more limited newbuilding capacity, we would expect to see strong competition for what little tonnage becomes available in the market,” English said.
“Demand for older tonnage also looks set to remain firm.”
However, he said there could be a decline in values for tankers older than 15 years as increased restrictions from regulatory pressures limit their trading options.
SSY noted a strong buying appetite for secondhand tankers during 2023, while bulkers started slowly but picked up as the year progressed.
This year has begun against a backdrop of uncertainty and potential volatility, English said, “which may prove a positive for owners”.
He sees no issue with bulker deliveries being absorbed into the market, with many macroeconomic factors in the market potentially meaning increased rates.
He also foresees “increased demand” for secondhand units, particularly in the modern eco end of the market, where availability remains limited.
Tanker prices remain firm, in line with the relatively stable spot and period markets, he added, and the Red Sea crisis is having a significant impact on the tanker segment.
Pressure on the dark fleet
VLCC rates were higher at the end of 2022 than in 2023, but asset values rose.
English compared the November 2022 sale of a South Korean 2013-built scrubber-fitted VLCC at $66m with a $73.5m price tag for a sister ship that changed hands in December 2023.
Vintage vessel prices are still relatively strong, although they dipped in the second half of 2023, due to “increased pressure on the dark fleet”, as well as more stringent regulatory requirements.
“Interest in older ships is more muted and naturally buying focus is more on more modern tonnage, particularly against sparse availability,” he explained.
Only 35 LR2 tankers changed hands last year, down 15% year on year.
But English said: “This is no reflection on buying appetite — it comes against the background of limited availability.”
