BRS Shipbrokers says buyer interest is increasingly focused on more modern secondhand tankers, leaving older sisters out in the cold.
In the first two months of 2024, the momentum in younger tanker asset values has outpaced older units, the firm said.
“This has been our call since [the third quarter of] 2023, when we saw market conditions shaping a shift in sales and purchase interest in younger units, driven by the peak in Russian oil trade recalibration towards longer distances and the build-up of a shadow fleet,” along with the upcoming European Union Emissions Trading System and the International Maritime Organization’s Carbon Intensity Indicator regulations, it added.
BRS explained that the change is being further supported by trade disruptions caused by the collapse in tanker transits via the Suez Canal and reroutings around the Cape of Good Hope.
All this is expected to “sequentially increase” interest in larger and younger eco crude tankers in the five to 10-year age range, along with similar product tankers.
BRS also spies “more asset value upside on the horizon to properly reflect the eco earnings premium and emissions costs savings”.
Since the Ukraine war began two years ago, the price gap has narrowed between ships aged 10 to 20 years and those aged five to 10 years.
The reshuffling of Russian oil flows amid the introduction of the EU embargo and G7 price cap in early 2023 supported the build-up of a shadow tanker fleet consisting mainly of older units, with aframaxes favoured the most.
But now the geopolitical disruption in the Middle East is expected to favour newer ships.
Emissions factor
“This also reflects the shifting focus towards fleet renewal, via acquiring younger assets to mitigate emissions, and on optimising performance on longer voyages,” BRS said.
“Indeed, we view the EU ETS as an additional driver, as it favours the deployment of more energy-efficient VLCCs and product tankers on EU trades.”
This factor is becoming highly relevant, BRS argues, considering 21% of crude oil destined for the EU in February was carried on VLCCs, and therefore liable to surrender emissions allowances.
The figure compares with just 6% in the same period last year.
In the first quarter so far, annual asset value gains have been highest for suezmaxes, with average five to 10-year-old ships assessed up by 13%.
VLCCs are next on 11% and aframaxes are up 6.8% compared with a year earlier.
“With product tanker asset values lagging behind crude tankers throughout 2023, short-term rises across ages might be observed before a shift in interest in the five to 10-year-old spectrum drives momentum higher in this vintage,” BRS forecast.
