Belgium's Euronav has added another scrubber-fitted VLCC resale to its fleet as it defies temporary tanker headwinds.
The company is paying $93m for a 300,200-dwt ship being built at DSME in South Korea, as it continues to take the plunge into exhaust gas cleaners after softening its stance on the technology under chief executive Hugo de Stoop.
The vessel will also come with a ballast water treatment system.
The tanker is due for delivery earlier in the first quarter of 2021 and is a sistership of the three VLCC resales Euronav swooped for last month at the yard.
All of these newbuildings are controlled by Sinokor Merchant Marine of South Korea and were priced at $93.5m each.
It was thought the fourth Sinokor VLCC had been sold elsewhere, but Euronav has now managed to complete a deal.
Fearnley Securities called the purchase "another attractive acquisition" with delivery into what it foresees as a strong 2021 tanker market. The price is in line with its estimates.
"Although current spot rates don’t defend too much of a premium for a resale vessel, we continue to see a fair value on 2020 vessels in the high $90ms," it said.
"This is obviously well below last-done of $106m, but in reality it only reflects the cash flow difference arising from the rates achievable in the fourth quarter (scrubber-fitted VLCCs earning $80,000 per day in three months equates to $5m incremental value to equity."
De Stoop said: “Management and the board continue to believe that the fundamentals of the large tanker market remain constructive despite substantial headwinds surrounding economic activity linked to the coronavirus
Covid-19 impacts to be temporary
"We believe and hope these will be temporary albeit likely to impact tanker markets until the end of the summer 2020."
The transaction is consistent with its strategy of not adding to the world fleet by ordering new tonnage, Euronav said.
Financing will be from existing borrowings.
"Balance sheet debt leverage will continue to remain appropriate in order to allow the company to retain its strength and flexibility," Euronav said.
The company said the first Sinokor trio will give the vessels "exposure to the key winter freight markets" in 2020 and 2021.
The deals will help rejuvenate its VLCC fleet, which currently has an average age of just over seven years.
In the weeks before the outbreak of the coronavirus, Euronav had been signalling it might move on scrubber-fitted tonnage.
The tanker owner also pointed to its large dry-docking programme for 12 ships this year and talked of the possibility of retrofits.
At the same time, a large number of scrubber-fitted VLCCs emerged for sale, at strong prices in what was then a buoyant and upbeat market for large tankers.
But the spread of the virus had limited retrofit work at yards and rates collapsed as Chinese demand fell and sanctioned Cosco tankers returned to the market.
