According to US marine consultants Macquilling Services, recent tanker deals from Japan indicate a drop ranging from 30% up to 70%.
According to US marine consultants Macquilling Services, recent deals from Japan indicate a drop ranging from 30% up to 70%. ?The reported sale of a newbuilding VLCC for US $110 million, followed by a sale of a modern Aframax tanker at US $42.5 million and the latest reported sale of a single hull VLCC for US $14 million, all point to the staggering drop in values? from September of 2008 said Mcquilling. Of course, these sales were concluded by Japanese sellers and may not be representative of the market, still they are the latest done sales in these sectors. As the consultants note ?even if these levels may not be immediately repeated, as some sellers may consider them to be too low, they certainly are likely to have a negative impact on vessel values?.
Ship owners have to operate in a rather unpredictable sale and purchase market and many brokers are rather hesitant to provide valuation services with volatility being the norm. That said, some sellers are on the distressed side and are willing to accept below market numbers. On the other hand, other sellers are looking to achieve the maximum possible price for their vessels.
On the buyers side though, their cash liquidity combined with charter commitments will prevail in their purchasing ability. According to Mcquilling ?it is interesting to note that long term time charter contracts, from an established charterer and with healthy rates, used to be one of the most desired cash flows for a ship owner. Nowadays, with dry bulk freight markets being historically low some charterers are seeking to re-negotiate their period contracts that were concluded at market peaks. This behavior places shipowners in a disadvantageous position, especially if the vessels in question were financed at high prices without a significant protection from credit risk?.
On the tanker sale and purchase market, modern tonnage values are firming, while older tonnage ? both single or double hull ? values are softening. Mcquilling suggests that prices are unlikely to return to pre-September 2008 market levels, especially when one considers the scarcity of credit availability, coupled with a gloomy freight market outlook.