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The Crude Oil Tanker Orderbook: What’s in Its Future?

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Crude oil tanker orderbook

The crude oil (DBO) tanker orderbook has fallen every month since the start of the year. Orderbook data tell us how many ships have been ordered and how many are under construction. The orderbook level helps us assess companies’ expectations of future rates and industry profitability.

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VLCC orderbook continues to fall 

According to data from Athenian Shipbrokers, the VLCC (very large crude carrier) orderbook fell in August 2016 to 36.6 million DWT (deadweight tonnage) from 37 million DWT in July 2016. The Suezmax orderbook also recorded a fall from 17.1 million DWT to 16.3 million DWT.

At the end of August, 119 newbuild VLCCs were under contract, which represents approximately 17.8% of the global VLCC fleet. This was lower than the previous month. Suezmax newbuilds under contract fell from 109 in July to 104 at the end of August.

The orderbook fell since the industry is already negatively affected by rising newbuilds entering the market. A falling orderbook suggests that crude oil tanker companies don’t have a positive outlook for the industry.

Orderbook concerns

According to Charles R. Weber’s tanker report, 17 VLCCs will be delivered from September to the end of 2016. Five are expected to be scrapped. The expected net fleet growth for VLCCs is 6% in 2016.

Similarly, 14 Suezmax vessels are expected to enter the market, while six are expected to be scrapped in the rest of 2016. The expected net fleet growth of Suezmax vessels in 2016 is 4.5%. Combined, the expected fleet growth is 5.4% in 2016, which is much higher than the 3% fleet growth in 2015.

This fleet growth raises concerns, and tanker rates could see a pull due to excess supply. This will negatively affect crude oil tanker companies such as Frontline (FRO), Nordic American Tankers (NAT), Teekay Tankers (TNK), Euronav (EURN), DHT Holdings (DHT), and Tsakos Energy Navigation (TNP).

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