Belgian tanker owner Euronav has begun ordering newbuildings again, striking a deal for at least two suezmaxes with Daehan Shipbuilding.
Several brokers and shipbuilding sources in Athens and Singapore say the company is in the process of inking two firm vessels at the South Korean shipyard priced at about $75m each.
This is about $9m above the price that Euronav paid for each of three suezmaxes it ordered at Hyundai Samho last year.
Market sources still described the $75m as a “very good” price, considering the early availability of the scrubber-fitted ships, which will be delivered in 2024.
On the other hand, the payment schedule seems to be slightly slanted in the shipyard’s favour. According to sources, the first installment equivalent to 20% of the total cost.
Newbuilding brokers recently pegged prices for suezmax tanker tonnage at around $79m per vessel.
The total volume of the deal might exceed the $150m mark. Some sources said that Euronav is ordering a total of four firm suezmaxes at Daehan this month, not just two.
The shipyard declined to comment, citing contract confidentiality.
Asked to comment, a Euronav spokesman said if the company had a completed contract for a newbuilding or any other corporate action to report, it would inform investors in line with capital market regulations at the Euronext and NYSE, where it is listed.
In 2021 Euronav was reported as planning to ink up to four suezmaxes at Daehan but no such deal materialised.
Newbuilding brokers said at the time that the agreement failed on a veto by the Korea Development Bank (KDB), which controls Daehan Shipbuilding, after the yard and Euronav failed to agree a new price in the wake of steel price hikes.
Euronav subsequently turned around and ordered three suezmaxes and one VLCC at Hyundai Samho Heavy Industries. These vessels are due for delivery in 2023 and 2024.
The new price level that Euronav is understood to have agreed to on these latest vessels, confirms the rising costs for shipbuilding material and labour costs amid a global surge in inflation.
Against this backdrop, tanker market prospects improved starkly after the outbreak of the Ukraine war, making investments in the sector appear attractive.
With the exception of a shuttle tanker ordered during the summer by Norway’s Knutsen NYK Offshore Tankers (KNOT), Euronav’s would be the first suezmax orders to be ordered this year.
Euronav and Frontline will come together sometime in 2023 to put the bow on a contentious merger.
