With ship owners flocking into shipyards for a "piece of the pie" of the prosperous looking product tanker market, South Korean shipyards have taken the lion's share of the market. According to the latest report from London-based shipbroker Gibson, 86% of all tanker orders  (ships above 25,000 dwt) during the past 16 months was for the product tanker segment, especially MRs. Out of these orders, 69% was placed directly at Korean shipyards, with the market share rising to a rather impressive 83% if you take into account tankers to be contructed in yards which are controlled overseas by Korean yards. Just for comparison, the orders placed in Chinese shipyards don't take up more than 10% of the market, while Japan registers orders for just 3 vessels.
According to Gibson, "while Chinese yards clamour for fresh orders for all types of vessel, clearly owners have a preference to build coated tankers at yards with a strong track record in this area; a claim most Chinesse yards do not yet have. The one Chinese yard that appears to buck this trend is Guangzhou Shipyard International (GSI), which has an excellent record in building good quality product tankers for European owners and is currently constructing 28 MRs/LR2s. However given recent developments, finding slots in Korean yards for the latest ‘tankers of preference’’ may become increasingly difficult as Korean shipyards continue to show a preference to build specialised tonnage guaranteeing higher revenues. Korean yards have moved away from basic ship types in favour of gas carriers, offshore and container ships which will generate larger profits, but just as importantly keep the orders turning over", the shipbroker noted.
It added that "this policy and the current rush to secure product tanker tonnage has created a surge in demand for shipyard slots which has necessitated Korean yards to subcontract hull construction to their overseas facilities. With spot tanker earnings rising and newbuilding prices firming, slots for 2015 delivery are filling rapidly. Based on our market expectations, fresh orders will continue, as more owners take to securing more efficient tonnage at relatively low prices. The cost of building an MR today is somewhere around $33 million, about 60% lower than the peak in September 2008. At today’s prices you will almost certainly get a better ship to fulfil both the owners requirements and those of the legislators", Gibson concluded, stating that it expects prices to move upwards, given the abundance of undeclared options waiting to be confirmed.
Meanwhile, in the tanker markets this week, on the Middle East, "solid levels of VLCC fixing continued, and at last owners managed to stage the breakthrough that they had hardly dared believe possible just a few weeks ago. Rates gained steadily through the week, ending at a new conference level of WS 40 East and into the low WS 20’s to the West. For now, availabillity looks just finely balanced enough against the anticipated end May/early June programmes to maintain the higher rate-range. Thereafter Charterers may ease up somewhat, and test owners' resilience once again. Suezmaxes started slowly, but then moved through a much busier phase. Unfortunatelly for them, the excess availability was never seriously challenged, and rates remained anchored to as low as WS 25 to the West and WS 55 to the East, with little prospect of a higher level being forced in the near/medium term. Early Aframax positions can command a premium as availability thins, but Charterers that are able to fix ahead will find themselves awash with enough tonnage to ensure no such issues arise. Expect levels to keep flatlined at around 80,000mt x WS80 for Far East destinations on the forward date", Gibson noted.
In the North Sea, the shipbroker said that "Aframaxes remain depressed, with vessels continuously outnumbering available enquiry. The Baltic stems are pretty much covered till mid third decade and rates stay at the bottom with little prospects for early recovery. 80,000 cross UK Cont stays at flat WS 80 level and the Baltic remains bottomed at WS 57.5 for now. Tonnage availability remains relatively light here for VLCC's but with limited interest Owners will need to consider other load options as an alternative, as of now though, last done levels for Singapore are US$3.5m and US$ 4.75 for China", Gibson concluded.