New bitumen tanker orders threatens oversupply

  • Market: Freight, Oil products
  • 07/03/24

An order for two 17,000dwt bitumen tankers will add to a wave of new vessels carrying the product that will threaten overcapacity while also raising average vessel sizes and steadily bringing down the age of the global fleet.

Belgian shipping firm Euronav announced last week it had struck a deal with China Merchants Jinling Shipyard (Yangzhou) for the two vessels to be delivered in the fourth quarter of 2026. It said the tankers had been "chartered to a strong counterparty for 10 years upon delivery from the shipyard".

Euronav, which runs one of the world's most extensive tanker fleets, confirmed today this is its first foray into bitumen tanker ownership. It said the Belgian firm's close association with the shipyard, which it said would ensure good ship specifications, and its agreed time charter coverage and co-operation with an undisclosed party were the main factors driving the order.

The new vessels will have dual-fuel green methanol engines that are ready to be retrofitted for future operations to use ammonia, the firm added. It estimated there are currently 230 bitumen tankers worldwide with an average age of 15 years and with 8,000dwt average capacity.

The new tankers are part of a wave of recently delivered and ordered vessels to be launched in the coming years that some bitumen shipping players said would together lead to the bitumen tanker market becoming oversupplied.

While Euronav declined to comment on the contractual terms behind the 10-year time charter deal, one industry estimate for the daily rate that may have been agreed is in the low $20,000s.

Vitol, Gunvor, TotalEnergies taking on new ships

Global energy trading firm Vitol last week took delivery of the 37,000dwt Asphalt Sonata at the Chengxi shipyard in Jiangsu, China, underlining a shift towards larger tankers.

The same shipyard delivered a 17,779dwt newbuild bitumen tanker, the White Allegra, to international trading firm Gunvor in the fourth quarter of 2023 in a long-term charter arrangement.

TotalEnergies will operate three newbuild 8,000dwt bitumen tankers, with the first to be delivered in the final quarter of 2025 and the others during 2026.

Continental Bitumen, a unit of French construction firm Colas, early last year launched two new 20,500dwt dual fuel LNG/marine gasoil powered bitumen tankers — the Atlantic Narval and Baltic Narval — that it has used mainly to supply its own and other terminals in the Mediterranean, northwest Europe and South Africa.

Dual-fuelled ships could enjoy significant advantages over the bulk of the global bitumen fleet reliant on traditional bunker fuels as the EU's Emissions Trading System (ETS), a cap-and-trade programme that requires companies to pay for their carbon emissions, takes effect this year.

Greek shipping firm Queensway Navigation plans to take delivery of an 8,500dwt newbuild bitumen tanker from a Chinese shipyard this summer, with more similar-sized vessels likely to follow, signalling the firm's own switch to larger tankers having sold three of its four bitumen tankers — each around 5,000dwt — over the past two years and leaving it with one such remaining vessel, the 4,999dwt Sunpower.

Bitumen tankers in the 4,000-7,000dwt range have dominated cross-Mediterranean and northwest European trade for decades. Cross-Mediterranean freight rates for such vessels were especially elevated in the first half of 2023, with years of underinvestment in new capacity leaving spot supply tight in the spring/summer peak season for road-building and bitumen demand in Europe and north Africa.

The average freight rate for an average 5,000t bitumen cargo shipment between Augusta, Sicily, and Mohammedia, Morocco surged to $91/t in July last year, up from $80/t four months earlier, before falling back heavily since to around $65/t on a sharp autumn slowdown in European activity and demand followed by the usual winter low season that is now coming to an end.


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