Evangelos Pistiolis has signed up for a pair of 300,000-dwt newbuildings at Hyundai Heavy Industries to mark his entry into the biggest tanker class after a career of several years in shipping.
Contacted by TradeWinds, the Greek owner confirmed the order is for the private side of his Central Shipping Group of companies. He declined to discuss details such as price, in line with confidentiality agreements.
The Yonhap news agency said earlier on Thursday that the South Korean shipbuilding group won an order for two VLCCs from an unidentified European owner in a deal worth KRW 220bn ($178m).
Shipbuilding players and market sources familiar with the move, however, said that Pistiolis is actually paying slightly above $90m for each ship as he will equip them with scrubbers and other high-specs, in line with usual company practice.
The ships are believed to be due for delivery in the last quarter of 2022.
"VLCCs are a childhood dream of mine, since I was 10. They always were my favourite ships," Pistiolis told TradeWinds.
The Greek owner considers that now is the right time to enter the segment. His company has the necessary operational and financial infrastructure to operate such big, expensive vessels and he also considers wider market conditions as propitious.
"We're ordering ships when nobody else wants to — that's when you get the best deals," Pistiolis said, when asked to comment on his timing.
HHI was going through a four-month hiatus for larger tanker orders until early May, when CM Lemos, another Greek owner, broke the spell with a deal for two suezmaxes. HHI landed its last VLCC contract early in 2020, when Athens-based Evalend Shipping booked one scrubber-fitted vessel, reportedly at between $94m and $95m.
Like most shipbuilders worldwide, HHI and its sister shipyards – Hyundai Samho Heavy Industries and Hyundai Mipo Dockyard— have been impacted by the outbreak of the coronavirus.
The Covid-19 pandemic has crashed the world economy and stopped international travel, which is essential for newbuilding discussions. The South Korean shipbuilding group is said to have achieved only 7% of the $14.8bn annual target sales to date.
“HHI is Pistiolis' favourite shipyard and it is not a surprise that he has ordered the VLCC newbuildings there,” the shipbuilding source said.
In December, Central splashed out around $130m for two scrubber-fitted suezmax tanker newbuildings at HHI. Delivery dates for the 158,000-dwt IMO’s Tier II emissions standards tankers are quite early with one of the two ships set for completion in the first quarter of 2021 and the other in the second quarter.
Pistiolis builds his VLCCs and suezmaxes at HHI’s Ulsan facility and they are 100%-owned by his own group. Asked whether the VLCCs would be eventually dropped down to Top Ships, his US-listed vehicle, Pistiolis said that is just one possibility and there are no such plans to that effect.
Top Ships has bought several smaller tankers ordered privately by Pistiolis. That, however, works as part of the company's strategy to own vessels with secured, long-time employment. VLCCs are by their nature more likely to trade in spot markets.
Top Ships recently acquired three scrubber-fitted 50,000-dwt MR tanker newbuildings from Central at just $18m apiece. Each of them have time charters for five firm years, plus two additional optional years, with Central Tankers Chartering, a company affiliated with Pistiolis. The potential revenue of the charter contract is around $128m.
The trio is currently under construction at Hyundai Mipo Dockyard and is due for delivery in the first quarter of 2021.
In his decision to order scrubber-fitted VLCCs, Pistiolis is unconcerned by current low spreads between high-sulphur and low-sulphur fuels, which significantly reduce the profit potential for such devices.
"When you order ships, you do it with a time horizon in mind," he said. "Things change — just six months ago people would trip over each other for a scrubber-fitted vessel."
