Petroleum Economist: The Tide Turns for Tanker Sector

“Lower oil prices and the economic downturn make the outlook less certain for tanker owners, but shipbuilders still have substantial orders on their books, writes Martin Clark…Despite order cancellations and the poor outlook for the market in general, shipbuilders still have substantial orders on their books. Hyundai Heavy Industries plans to deliver a record 119 ships in 2009 – topping last year’s 102 – from an order backlog of 350, which would normally take three years to build. Yet it is a difficult time for shipowners: the outlook for new-vessel demand has become considerably less certain, as has buyers’ ability to pay for them. Spot-market activity has fallen as oil demand in OECD countries has dropped and as Opec has cut production. VLCC spot-trade activity was down by 13% in October 2008-January 2009, compared with the same period a year earlier according to Poten & Partners, a consultancy; the number of fixtures in the Suezmax and Aframax segment was also down.”