Owners’ hunger for modern fuel-efficient tankers could lead to a big jump in assets prices, following news of Hafnia’s swoop for the Scorpio Tankers LR1 fleet.
TradeWinds reported last week that the BW Group company is in advanced talks to add 12 modern ships, which Hafnia has confirmed.
Clarksons Platou Securities analysts Frode Morkedal and Omar Nokta said the Clarksons sale-and-purchase desk has noted that, as with other potential deals, this transaction appears likely to be an all-cash affair.
“Given the strong desire on the part of buyers to acquire modern, fuel-efficient tonnage as new emission-based regulations take effect in 2023, we expect sizeable gains to be seen in terms of pricing for young ships,” they added.
Rates still under pressure
Clarksons Platou noted that tankers continue to be under pressure, with crude and product spot rates below break-even levels.
The sector has for the most part remained below break-even for the past 18 to 19 months, but many observers are tipping a gradual improvement into the second half of 2022.
“Some tanker equities are revisiting their 52-week lows, as both a tough broad equity market and difficult earnings have combined to limit investor interest,” Morkedal and Nokta said.
But they added: “S&P activity and inquiry signals values are likely to push higher, despite the prolonged weakness in earnings.”
Clarksons Platou believes its $24.50-per-share net asset value assessment for Scorpio may be understated, as a new price level may be reached for the LR1s.
“This would provide a boost to its cash reserves and a bridge to a healthier market we forecast starting later this year,” the analysts said.
The tankers — all built in 2016 except for one constructed in 2015 — are estimated to be worth between $30m and $32m each by VesselsValue.
Six-year highs being approached?
Nokta had already said the Scorpio price could approach the highest numbers for LR1s of that vintage since 2016, when the average disposal figure was $36m.
But TradeWinds has also reported an analyst accusing the New York-listed owner of conducting a “fire sale” of its LR1 product tanker fleet.
Deutsche Bank’s Amit Mehrotra said: “To be sure, Scorpio Tankers is not doing this from a position of strength, but rather from a position of defence, and it has prospective implications on the earnings power of the company given the sale of assets with among the highest earnings potential over time.”
Clarksons’ cross-segment ClarkSea Index fell by 4% week on week to $30,277 per day by 21 January.
Tanker markets were quiet, with activity lacking in key regions, Clarksons Research said.
Average VLCC spot earnings fell into negative territory again for the first time since last August amid subdued activity and increasing bunker costs.
