VLCC Orders Reach Record High Amid Oversupply Concerns
The VLCC market is experiencing an unprecedented boom, with newbuilding contracts reaching an all-time high in the first half of this year. According to Maritime Strategies International (MSI), 177 VLCC newbuilding contracts were signed globally during this period, exceeding the previous annual record of 32.6 million deadweight tons (DWT) set in 2006.
The total DWT reached 54.5 million, with prices per VLCC soaring above $130 million, the highest level since 2008. South Korea's Hanwha Ocean secured an order from Greek shipowner Kalovama Maritime for one 300,000 DWT VLCC at a construction price of $130 million, roughly 4% higher than last year.
The surge in orders is largely driven by Middle Eastern oil-producing nations building their own fleets due to disruptions in crude transportation through the Strait of Hormuz. This has created concerns about a potential supply glut in 2028-2029, as approximately 83% of VLCCs ordered this year are scheduled for delivery during this period.
Analysts warn that falling freight rates and deteriorating vessel profitability could result from this oversupply, echoing concerns similar to those seen during the 2004-2008 upcycle. However, some argue that the current situation differs due to fleet renewal needs and demand for eco-friendly fueled vessels.