By Henry Curra
Just another supercycle?
How many tanker NBs will deliver over the next few years? A lot more than we thought this time last year, that’s for sure.
As regular readers will know, we source our newbuilding information direct from the yards andtechnical depts. We like to think this gives us a more complete picture of future yard activity. For instance, 15% of our current tally of tanker orders has yet to be picked up by the third-party ship data provider we use for cross-referencing. This figure rises to 21% for the dry bulk orderbook. The same source misses 12% of the container orders, 8% of the LPG orderbook and 6% of the LNG orderbook.
As most of these missed orders have delivery dates far into the future, it perhaps does not matter much. After all, the number of ships that we say will deliver in 2027, for instance, will be influenced not just by unforeseen yard delays/cancellations/conversions/late reporting of scheduled deliveries, but also by deliveries of orders that have yet to be placed. We are still filling the final slots for 2026. Yards have plenty of space for ships delivering in 2027 and beyond.
Only the yards themselves and those (like us) foolish enough to forecast freight rates beyond 2025 care much about how many ships will eventually be built over the next four or five years. But a considered estimate of fleet growth is, for us, a key determinant of future tanker utilisation. If the number of scheduled deliveries in a given year overtakes our estimates, we are inclined to downgrade our freight forecast for that year, and vice versa.
Although China ensured 2024 was a disappointing year for tanker demand, NB ordering in 2024 has been much more active than we expected. During 2024 the tanker orderbook went from just over 7% of the existing fleet to over 15% in dwt terms. As the series of six charts below highlights, 2026 now looks likely to deliver77%more tanker capacity than we thought a year ago - with 98% of this volume already contracted. The biggest underestimate related to coated tankers. This time last year we thought 51 Afra/LR2s would deliver in 2026. Now we expect to welcome 88. We thought 11 LR1s would deliver in 2026. We are now expecting to see21. Our estimate of 60 MR deliveries in 2026 has more than doubled to144. Sixteen Handies has grown to41(mostly chemical tankers). Even VLCCs and Suezmaxes are now expected to deliver in greater numbers in 2026 than we expected this time last year. We now expect 24 VLCCs and 45 Suezmaxes to deliver in 2026, up from 16 VLCCs and 29 Suezmaxes this time last year.
2027’s scheduled deliveries have also already significantly overshot our expectation for total deliveries this time last year. Today welist 46 scheduled VLCC deliveries in 2027, up from our original estimate of 20; 31 Suezmaxes, up from our estimate of 26; 63 Afra/LR2s, up from 37; 18 Pana/LR1s, up from 8; 93 MRs, up from 60; and 38 Handies, up from 10. We also expect further orders to be placed for delivery in 2027 because:
a. We expect ordering for other ships types to slow down after a busy 2024, leaving more slots available to tankers.
b. The slowdown in ordering is likely to focus on ships that would have been trickier to build, like LNG carriers and container ships. This will open more space to tankers than the simple ‘share of dwt’ would suggest. Tankers currently make up around 35% of DWT delivering in 2027, but just 20% of CGT
c. We expect capacity at Chinese yards will continue to expand, opening new slots from 2027. CGT expected to be built worldwide in 2026 is already 3% higher than 2025, which was itself up 4% on 2023.
d. More Chinese capacity will be targeting tankers. Not just those yards that already build tankers, but those like Yangzijiang Shipbuilding that have recently moved into the tanker space.
Even if tankers were to maintain their 2026 share of total CGT built worldwide, this would requireacity of today’s delivery schedule for 2027 to grow by 12%.
2028 and 2029 deliveries are of course even more difficult to estimate. Investment in new tonnage this far out will depend partly on NB prices at the time of ordering. Yard cost inflation is likely to continue, and the state will be reluctant to underwrite loss making orders in the main build countries. This will raise the floor on NB prices. But growing shipbuilding capacity particularly in China, and a likely slowdown in ordering of other ship types like containerships and LNG carriers should increase competition between yards for tanker slots. This will exert downward pressure on prices.
Then there is the question of how many tankers investors think the market can tolerate. our outlook for tanker demand has weakened over the past six months - partly in light of China’s economic tribulations - its impact on tanker supply and demand balances pales into insignificance next to the phase out of older tankers. The retirement age of tankers will be governed less by the prevailing freight market, and more by changes in demand from exporters subject to western sanctions. This makes replacement demand inherently difficult to predict.
Currently we assume shadow tanker demand doesn’t grow from here. As such we lose each year at least the equivalent capacity of ships turning 20 years in that year. But we also make a judgement as to when we will lose tankers that are already over 20 years old. This hinges not just on geopolitics, scrap prices and freight markets, but also, and increasingly, on the effectiveness of upcoming emissions regulations.
Having revised our NB delivery numbers upward, we could of course now risk overstating fleet growth at the tail end of our five year outlook. Interesting to note that just this morning we learned of the cancellation by a large trader of what we had assumed was a firm order for four Handies delivering 2027. If confirmed this would represent the first cancellation oftanker order for a long time. greyer haired among us will still remember (just) that a full 15% of the orders placed during the commodity supercycle were subsequently removed from the tanker orderbook prior delivery – 90% of which were either cancelled or converted to other ship types.
Braemar’s estimate of NB tanker deliveries in…
