Hafnia chief executive Mikael Skov is bullish on product tanker prospects this year due to the sector's lowest orderbook in 30 years.

Shipyards have only six LR1s on their books currently, and 35 LR2s.

Orders for LNG carriers, VLCCs and suezmaxes have been filling slots worldwide, but Skov said: "We see very little for product tankers."

He believes price levels relative to vessel size for new eco-designs is keeping a lid on orders.

He told TradeWinds: "Dual-fuel engines make more sense for bigger ships. If we ordered a new MR it could add 25% to the price."

Owners are holding off until new designs are available and prices are more attractive, he said.

Virus effects negligible so far

Skov also said that product demand growth is exceeding fleet expansion for the first time since 2015.

Markets are looking up after a dip at the start of the year due to the coronavirus hitting Chinese demand.

"There has been a bit of a rebound lately in Asia in spot markets. It is moving in the right direction," Skov told a conference call.

"The Far East is showing strength and handysize ships are still doing very well."

After the virus plays out, Skov is hoping for increased activity to build up inventories again.

But he told TradeWinds there would inevitably be more pronounced effects the longer the outbreak persists.

The company has noticed very little direct effect from the virus on its own vessels and crew, however.

It has had a number of tankers trading in and out of China in the past few months with no real delays, he said.

"With tankers, there is not much contact with the community. It's not very labour intensive," he said.

Content with fleet

In its results presentation, Hafnia said it has the lowest operating and finance costs among its peers following its merger with BW Tankers last year.

The cash break-even level is $13,625 per day across the fleet.

The company said this means that for every $1,000 per day rise in rates, its 2020 profit will jump $32m.

It has a fixed fee for its three pools of $250 per ship per day, plus a commission of 2.25% of net time charter earnings.

Hafnia has 176 ships under management, making it the biggest product tanker operator in the world, and second only to Scorpio Tankers in terms of owned vessels.

Skov said he is happy with the size of the fleet. "We had the merger last year. That doesn't mean we couldn't do something, but we're focused on getting the best out of our platform now," he said.