Greece’s Allied Shipbroking has painted a picture of a blissful tanker sale-and-purchase market, with sellers revelling in strong vessel values.
“In a high asset price environment, the market appears in a euphoric state,” it said, noting “a plethora of market participants transitioning in an expansion phase”.
But the Athens shop said exploring fresh opportunities in the secondhand arena is challenging even in a bullish phase, as downside risks are “usually mispriced and remain hidden”.
Looking at the price evolution of five-year-old vessels, the current elevated values could hardly be seen as attractive, especially by more “conservative” parties, despite the prevailing robust freight conditions, Allied argued.
Its data shows five-year-old VLCCs approaching $120m in value, up from around $65m three years ago.
South Korea’s Korea Line Corp is testing price ideas this week in a tender to sell four VLCCs built in 2019 and 2020.
The last-done level for this vintage was between $114m and $116m in December.
Allied said entering the sector at a time of peak rates comes with its own challenges, but most buyers want more modern ships for the long term.
“When compared with secondhand prices, especially in suezmax and aframax sizes, placing a new order seems very opportunistic, especially if both the investment horizon and opportunity cost fit the investor’s profile,” it said.
Rising path
The orderbook to fleet ratios have already been on a rising path for some time now, the shop added: “In a global fleet that may appear to have a high overaged ratio, being an owner of modern assets could be advantageous.”
However, given that the orderbook schedule now suggests delivery dates in early 2027 at best, this approach comes with many uncertainties too.
For more risk-averse parties, fleet renewal appears to be a preferable option, however, the company believes.
Modern assets are seemingly more “resistant” to value depreciation.
“All-in-all, in a market around period peak levels, where assets may be liable to correction, being placed in the more modern asset arena seems the most protective position at this point,” it said.
Greek broker Xclusiv described last week was one of the busiest in 2024, with 13 tanker sales noted.
Great Eastern Shipping of India was said to have received $14.5m for its 46,300-dwt MR Jag Pahel (built 2004).
It announced the sale earlier in April, but gave no price. The vessel will be delivered to an unnamed new owner by the end of June.
The Jag Pahel is worth $17.7m, according to VesselsValue, up from $9m two years ago. It has been owned by Great Eastern since delivery.
