Product tanker orders smash 2022 total in six months 

An upsurge in freight rates and demand has seen product tanker orders in the first half of this year already surpass last year’s total newbuild contracting, reaching 8.9m dwt by June, according to shipowning body BIMCO.

The product tanker orderbook to fleet ratio has increased from 5.4% last December to 9.3% in June 2023, driven by a 337% year-on-year rise in contracting during the first half of this year. 

Although the contracting of MR and LR1 tankers surged significantly, it was the LR2s that increased the most. So far this year, 5.6m dwt of LR2s have been booked for construction, bringing the orderbook to 21.6% of the present LR2 fleet.

Shipbuilding deals for ten LR1s this year should also be highlighted, as no ships in this segment had been contracted since 2018, BIMCO noted. 

“The product tanker fleet has been gradually aging over the past ten years, and the average ship is now nearly 13 years old. The increase in contracting will help the sector address the increased market demand and could help rejuvenate the fleet,” said Filipe Gouveia, shipping analyst at BIMCO.

An increase in product tanker demand, caused by the war in Ukraine and, particularly, the EU’s ban on Russian oil products, has resulted in higher volumes shipped and longer sailing distances, boosting rates and newbuild contracting. 

The ships ordered this year will mostly deliver in 2025 and 2026 and until then, BIMCO suggested supply growth should be limited, with rates influenced mainly through demand factors.

“The impressive pick-up in contracting this year could however begin to slow down in the medium term. The International Energy Agency estimates that oil demand could peak already in 2028, which would limit further fleet growth. As such, new contracting may focus on replacing the aging fleet and on reducing greenhouse gas emissions,” added Gouveia.