ECO-design VLCCs could knock older values

VLCCS that burn less fuel than current vessels of the same type might push down secondhand values of such tankers, according to Poten & Partners, the New York tanker broker. It cited market rumours indicating that Frontline 2012, the shipping sector growth vehicle in John Fredriksen’s business empire, was close to ordering four ECO-design VLCCs at $87.5M apiece. “The most recent confirmed VLCC order was concluded in May at IHI Kure, with an attached price of $100M,” Poten said in a weekly market report. “Accordingly, the 12.5% discount an $87.5M newbuilding order would represent today is considerable.” If an order has been placed, this could also force a rethink of values of 5-year old VLCCs, which have already been greatly complicated by the time since these were last tested. “Recent five-year assessments have ranged widely, from $54M at the lowest end to $65M at the highest, whilst the last testing was in January 2011 at $91.3M,” Poten explained. “The midrange assessment of $59M does continue to represent an attractive level, in our view, though some softening could follow any confirmation of newbuilding orders concluded at $87.5M,” Poten concluded. Hanne B Sorensen, CEO of Maersk Tankers, told Fairplay in April that secondhand values of existing tankers might be depressed because of better performance of ECO designs. But she added that the jury was still out with regards of the extent of savings ECO designs would offer. Meanwhile, Poten estimated that a 300,000dwt ECO design VLCC would consume 68 tonnes of fuel per day in laden conditions at 15kt, compared with 86.6 tonnes for a 2011-built VLCC and 98 tonnes for a ship built in 2006. The bunker cost would swallow 58% of freight revenues of the ECO design vessel, from 74% for the ship built last year and 85% for the one built in 2006.