The Asset Game

One can’t help but notice a disconnect between slipping freight rates, weak demand fundamentals and the surge of newbuilding tanker orders seen in recent months. Asset values are derived from the expected earning of that asset over its life, but with the tanker market sending mixed signals on the pace of recovery, other forces are ostensibly in play. The chart below displays the relationship between asset prices and spot market freight rates in the VLCC sector over the past few years. Recent months have seen many new orders placed at shipyards, particularly in the large crude oil tanker space. When it comes to decision making about where to place the big bucks, what has gotten into the shipowners’ psyche? Download here