Nordic American Tankers Ltd (NYSE: NAT) – The market is good for our ships!
In shipping there are many opinions about demand, but the size of the current fleet and the orderbook for new ships are not in dispute. These are facts.
The current tanker dynamics send a clear message about a tonnage balance in our favor!
Despite a traditional low season and OPEC cuts, the TCE earnings for this quarter are still 50% ahead of the average for the past 10 years.
Combine this with an orderbook so low it is still breaking 20- and 30-year records. Currently the vessels on order account for 9% of the existing world Suezmax fleet.
The orderbook is not only low, but almost more significantly is the lead time! It is an orderbook spreading across more than four years!
With cost of capital increasing by the day and clouded visibility, it is difficult to envisage a rush of orders for delivery four and half years out in time.
There is only one new Suezmax vessel left to join the world fleet this year and 2024 will only see six Suezmax tankers added to the global fleet.
This just goes to prove the lesson from tanker economics: the supply of tankers is inelastic in the short term. But this time it looks like short term is here for longer.
This should continue to keep the tonnage balance in our favor for several years to come.