Before the recent hike in rates this week, figures suggest suezmax tankers are faring better in the market downturn than other sectors and may even have better prospects.
One broker describes suezmax newbuildings as “the best of a bad lot”, in terms of investment opportunity.
A key factor for investors is the size of the suezmax orderbook, which is significantly lower than that of VLCCs, aframaxes and product tankers as a proportion of the fleet.
According to figures from London broker Clarksons, it is 15.7% for VLCCs and 12.8% for the aframax fleet but only 11.8% for the suezmax fleet.
The delivery schedule for the suezmax orderbook is also much more evenly spread over the next three years, which means the market is likely to be less volatile.
However, the VLCC orderbook will overwhelmingly hit the water after 2016 and could put a considerable strain on the market at that time, pundits suggest.
There is also concern that Chinese shipowners will continue to invest strongly in VLCC tonnage but they have shown little interest in suezmaxes because of the need for higher cargo volumes on the trade between West Africa and China.
But suezmaxes have also performed better during a miserable market in terms of holding up asset values. Suezmax newbuilding prices have fallen 0.5% over the past three months since prices started to slip. That compares to 2% in the VLCC market and 0.8% for the newbuilding sector as a whole, according to Clarksons’ statistics.
Resale and secondhand prices for suezmaxes have also firmed up to 4% this year, while remaining stagnant for VLCCs.
Before the recent hike, owners would also have noticed that suezmax time-charter payments were covering more of the cost of a newbuilding than any other sector, presenting another argument in favour of investment.
One-year suezmax time-charter rates cover more than 80% of the cost of building and operating a new vessel compared to around 75% for VLCCs.
