Veson Nautical has taken a look at the current position of the VLCC market across vessel values, earnings, and S&P activity.
Veson Nautical has observed that values for VLCCs have fallen year-on-year, with values for 5-year-old vessels of 320,000 DWT down by approximately 4.1%, from USD 113.88 million to USD 109.21 million. However, since January 2024, values for 5-year-old VLCCs of 320,000 DWT have remained stable—not dropping below USD 107 million.
The last time values were at these levels was in November 2008, marking a significant historical benchmark and suggesting that, despite downward pressure, asset values may have found a firm floor compared to previous cycles.
Although values have remained strong, the volume of sales has dropped off considerably from the same period last year, declining by approximately 67% year-on-year. In the first four months of 2024, 58 sales were recorded, whereas only 19 were recorded over the same period this year.
Data suggests there are fewer Chinese-built vessels being transacted due to concerns over new US tariffs. This considerable contraction in market liquidity indicates growing caution among buyers, who may be reassessing asset exposure amid evolving market dynamics, or it may reflect a shortage of attractive candidates on the market.
TC rates for VLCCs have increased by approximately 5% year-on-year, from just below USD 45,000 per day this time last year to USD 47,000 per day at the time of writing.
This contrasts with other Tanker sub-sectors that have seen less volatility in earnings, primarily due to market uncertainty, notably surrounding potential tariffs introduced by the United States. However, demand for the largest Tankers has remained stable, largely due to geopolitical disruptions, including tensions in the Middle East, continued sanctions on Russian crude exports, and recent production increases from OPEC—all of which have reshaped trade patterns and favoured larger Tankers.
Notable sales include the VLCC Eurohope (306,500 DWT, Oct 2007, Daewoo), sold to unknown Chinese buyers for USD 46.25 million (VV Value: USD 45.07 million). Also, the VLCC Layla (317,800 DWT, Aug 2007, Hyundai Samho HI) was reported sold this week to Chinese buyers for USD 46.5 million (VV Value: USD 44.86 million), indicating a strong price for this sector.
The VLCC market remains in a relatively stable position in terms of asset values and earnings, especially when compared to other Tanker sectors. However, the sharp drop in S&P activity suggests that participants are approaching the sector with increased caution. Going forward, continued geopolitical developments and the potential for further regulatory or economic shocks will be key factors influencing the trajectory of the VLCC market.
