Key takeaways:

  • Prices continuing to firm at tanker yards, primarily Korea.
  • Chinese dry bulk builders there to discuss, expect them to lower pricing going forward (especially Kamsarmax and down) à however, once the market moves, they will lock in a floor.
  • Tanker (4.0%) and Bulker (7.2%) order books still at historically low levels. Renewal will start at some point!
  • Scrubbers still the favored choice for tanker enquiries.
  • Further container orders may push Afra (8-10k TEU orders) and Suez (12 – 16k TEU orders) deliveries at the big three into 2026, VLCCs are already there except for 2-4 slots end 2025.

Getting close to year end the usual rush to finalize newbuild deals is close to nonexistent. Even though rates have dropped drastically for containers the planned orders for larger series (24,000 teu and 15,000 teu) have gone through, with deliveries from 2026 to 2028. LNG orders have slowed down due to slots offered 4-5 years ahead and Owners reluctant to place orders that far into the future without back-to-back Time Charter Parties.

With regards to selection of fuel October was the first month where number of orders for methanol-fueled vessels surpassed the number of LNG-fueled vessels, we’ll call it an anomaly rather than a shift of trends for now.

We see that Korean yards in general are firm on their asking prices for most segments, not undercutting any previous orders even though enquiries for larger tonnage (Afra to VLCC) have been slow since summer. On the product side (MR) and LPG side (especially MGC) the yards have seen a large uptick in enquiries supported by the strong product and LPG markets, with added fuel to the fire from all the ammonia talks.

Slot availability is not only restricted by actual slots, which is why expectations that closed yards will open to accommodate early deliveries are unlikely at best. Yards in Korea, Japan and China are struggling to find manpower to construct already signed vessels, along with main equipment sourcing being another bottle neck.  

LNG

There are around 270 LNGCs in the current fleet with steam turbine or slow speed diesel propulsion, which will have to be replaced in the mid-term. These vessels will be much less favorable to trade with the upcoming environmental regulations, and the steamships are also significantly less economical due to their size and boil-off, which is enhanced by the high gas prices. 

The big three in Korea have already committed roughly 70% of their 2027 LNG build capacity to Mozambique and Qatar, with high likelihood of firming them up. With regards to Chinese LNG builders, there are now six-seven yards interested with firm orders on four of them (Hudong-Zhonghua, Jiangnan, Dalian and Yangzijiang). China Merchants, COSCO and New Times have still not taken orders, with COSCO and New Times being less eager for now.

We expect price to stay above the $ 250 m mark through 2023 at the four main yards, with increase at each order.

Tankers

Nothing new to report here other than the fact that tanker order book is getting slimmer by the day, with no additions to talk of. For VLCCs the total order book is at 35 vessels until 2026. Only 4 available 2025 slots world-wide. 170 VLCCs are older than 20 years by 2026, seen as scrapping candidates.

Suez and Afra can still be delivered in 2025, but we’re not talking volumes.

Bulkers

So far this year we have registered close to 700 order placements in the dry bulk segment. We expect ordering to increase next year, perhaps by a significant amount. Earnings have been at decade highs the last year and a half, whilst the orderbook has remained around all-time lows. This means that owners balance sheets in general are very solid, represented by low leverage ratios amongst almost all the stock listed companies.

Regarding the market outlook, our analysis is that fundamentals will start improving around the middle of next year onwards. China is stimulating their economy by means of interest rate cuts, tax cuts, infrastructure spending and doing their outmost to turn around the property sector. Further, it is likely that anti-COVID measures will be loosened from March onwards. We expect economic growth in the world ex-China to recover from the start of 2024 onwards. 

Shipyards, especially those with dry bulk focus, are in a wait and see state, trying to keep the pricing level they set before the summer. Latest order proves this, CMB recently did a repeat of the Newcastlemax order at $ 64 m, which is $ 2 m down from their order in March with a discount for the number of vessels (8 firm).

Containers

With a lot of cash on their hands, we expect between 20 and 30 more container vessels before years end in the size range 9,000 TEU to 15,000 TEU, both methanol and LNG dual-fueled.

Repeating ourselves from earlier, fears that container owners cancel or convert their ongoing newbuilds is unfounded looking at the existing fleet and ordered vessels. Orders are to a large extent set to replace older tonnage and meet new regulations; few speculative orders have been made.

LPG

A lot of fleet growth in 2023 and 2024, but limited for 2025, with yards sold out until end ’25 for VLGCs. The LPG segment has received a lot of interest over the summer due to growing ammonia interest, especially LGC and MGC enquiries.

We expect that the market will absorb the order book, and still see undersupply of tonnage. Expect to see a growing order book with earnings as they are.