MR tankers could be set for a steep fall in value if global stock markets are anything to go by.
Clarksons Securities noted an average $1m drop in secondhand tanker prices for all ship types last week, but more could come.
MRs have been the most frequently bought and sold tanker in recent weeks, keeping a very quiet sale-and-purchase market ticking over.
But the investment bank said five-year-old vessels have fallen in value by nearly 10% in the past two months.
Despite this, with one-year time charter rates at $23,250 per day, projected cash returns remain at a solid 12.6%, suggesting a floor for ship values as long as term earnings hold steady, analysts led by Frode Morkedal said.
The Baltic Exchange assessed Atlantic basin spot rates for MRs at $27,000 per day on Friday, up 28% on the week.
But stock exchange valuations are continuing to reflect a deep discount to net asset values for shipowners, Clarksons pointed out.
Product tanker companies are trading at just 62% of NAV, the analysts said.
“This implies that the stock market expects a further 26% decline in ship values for product tankers, potentially lowering the price of a 10-year-old MR from $36m to $27m,” they added.
Clarksons assessed the price of a 15-year-old aframax down $3.5m to $37.5m, while a suezmax of similar age fell $2m.
Fragility in shipping equities
The only rise was $0.5m on a newbuilding VLCC at $129.5m.
Car carrier and tanker owners made modest gains in share prices, while dry bulk and LNG carrier companies fell by 3% last week.
“The fragility of shipping equities is clear: stocks have lost 10% to 20% of their value in recent months, only beginning to rise last week,” Clarksons Securities said.
“Investor sentiment remains cautious, with spot freight rates struggling to establish a clear upward trend, as is typical during the winter season,” they added.
But the analysts still see significant opportunities in the sector.
“Valuations remain appealing, with substantial discounts to net asset values, and low spot rates required to generate meaningful earnings metrics,” Morkedal and his team said.
