12th February 2010 - New Deliveries - Not As Many As You Think?

Following last week's report, which discussed the greater prospects for scrapping in 2010, today we highlight an expected decline in the number of new tanker deliveries this year.

The starting point for assessing deliveries in 2010 is what has already been delivered and the current scheduled orderbook for this year.  Based on this, 443 new tankers above 25,000 dwt would be expected to enter service; which on the face of it would indicate more new deliveries than the 405 seen last year.  However, we know the collapse in market earnings last year led to newbuilding contract renegotiations, delays and cancellations.  The nature of these changes is not always transparent and tends to be kept "behind the scenes".  Nonetheless, we can try to get some handle on developments by looking at what the scheduled tanker orderbook was for 2009 at the start of the year and compare it to what actually happened.  From this, 79 tankers out of the original 484 scheduled for 2009 were not delivered, accounting for 16% of the original orderbook.  Looking at the breakdown by size, Suezmax and MR deliveries were around 75% of the original schedule; VLCC and LR1 deliveries were higher, at 89%, but the Aframax/LR2s were surprisingly high, with almost all scheduled deliveries actually coming out of the yards.

Given the collapse in the tanker market that took place in the 2^nd quarter of 2009, there is more leeway for delays to the 2010 delivery schedule than the 16% we saw last year.  We have assumed some 25% of 2010 scheduled deliveries will not arrive this year, and as a result some 300 new tankers will join the fleet (compared with last year's 405).  Looking at each size group, there would be around 50 VLCC deliveries, 40 Suezmaxes, 65 Aframax/LR2s, 25 LR1s and 120 MRs.  Using this and taking into account our forecast of scrapping and conversions, the net gain in tanker fleet above 25,000 dwt would be around 175 vessels this year, compared with 314 last year; still an increase, but not as much as in 2009.  However, substantial growth in oil demand and trade will still be required even to absorb this more modest growth in tanker supply.