Cido Shipping and Union Maritime are among the big names helping drive product tanker newbuilding activity to a near two-decade high.
Contracting of new product tankers during the first seven months of 2024 has reached the second-highest level on record, Bimco explained.
Bimco chief shipping analyst Niels Rasmussen said: “During the first seven months of this year, 194 product tankers larger than 10,000-dwt have been contracted with a combined capacity of 13.3m dwt.
“This is a 17% increase compared to last year and the highest level of contracting since 2006.”
Union Maritime posted the highest number of orders, at 22, then came Cido with 18, and Consort Bunkers, Dynacom Tankers and Eastern Pacific also had significant bookings, according to data from Clarksons.
As TradeWinds has reported, Union Maritime has been ramping up its orderbook, currently hitting $1.4bn. Similarly, Cido Shipping has racked up newbuildings worth $2.7bn.
Combined, contracting in 2023 and 2024 has rapidly expanded the orderbook, which grew 135% in 2023 and has already jumped another 45% so far this year to 37.1m dwt.
“Chinese shipyards have benefited the most from the renewed interest in product tanker newbuilding as they sit comfortably on 72% of the orderbook,” the report indicated.
As a result, the orderbook-to-fleet ratio has risen from 5.9% at the beginning of 2023 to 13.6% at the beginning of 2024, to now stand at 19.6%.
In 2025-2027, 90% of the orderbook is scheduled for delivery, suggesting a significant potential for fleet growth in that period, it detailed.
Rasmussen said: “Since the beginning of last year, the product tanker orderbook has been the fastest growing of all cargo-carrying sectors.
“It has swelled 241% and only the crude tanker order book has come close to matching that development with 151% growth in the same period.”
Rates down in the short term, higher year to date
In terms of product tanker rates, LR2 eco earnings are currently at $34,000 per day, down 21% on the month, according to Clarksons.
Eco LR1s are at $23,700 per day, down 32.2% on the month, and eco MRs sit at $26,000 per day, down 25% over the month.
Jefferies quoted LR2 eco rates at $36,200 per day down from $38,700 a week ago and $42,300 per day from a year ago.
However, the year-to-date average of $62,300 is significantly higher than 2023’s $49,800.
For eco MRs Jefferies rates are currently at $23,000 per day down slightly from $24,500 per day a week ago and $33,000 a year ago. The year-to-date average of $37,600 is somewhat above the $31,000 of 2023.
Looking ahead, Clarksons said a seasonal increase in demand is expected in the fourth quarter, which could be exacerbated by an accompanying strengthening of the crude tanker market, potentially reducing competition for product cargoes.
“Furthermore, geopolitical tensions remain high, with no sign of an imminent ceasefire in the Middle East, implying that disruptions in the Red Sea region could continue for the foreseeable future,” it said.
“Another wild card is the issuance of the third batch of Chinese product export quotas, which is expected to be a positive factor, especially if it exceeds current expectations,” it added.
Allied Shipping also noted the LR2 segment in the Middle East Gulf seeing increased activity of late, as tightening the tonnage list slightly was creating a more “positive sentiment”.
“If similar activity levels continue, a slight firming in rates is possible. The LR1 market had a challenging week. Owners are avoiding long-haul cargoes due to relatively poor returns, leading to fierce competition for short-haul routes and a decline in local rates,” Allied added.
