Euronav: No Need for New Eco-Ships in Crude Market

Euronav said the industry must retrofit tankers rather than buying new eco-ships

Euronav NV (Euronav) [EBR:EURN] says a reduction in the supply of crude tankers is crucial for market balance and most "eco gains" can be achieved by retrofitting ships for fuel savings instead of buying new "eco-ships."

The comments came as the independent tanker company deepened its losses in the first half of the year, reporting a loss of $41.4 million, compared with a loss of $20 million in the same period last year.

Euronav said the market remains oversupplied with crude tankers, which prevents rates from reaching a sustainable level.

"Fortunately, no speculative new orders have been placed since 2010," the company said.

"This is due to the fact that so-called 'eco-ships' do not exist in the large tanker sector.

"Indeed, most "eco gains" can be replicated through retrofitting fuel saving devices which can be done to existing ships at a fraction of the cost of a newbuilding."

Euronav added that there is "no ship over ship competitive advantage" in an oversupplied market, and older tonnage should be scrapped before new orders are made.

The company reports that its average Tankers International (TI) Pool spot rate for VLCCs fell to $17,600 per day for the first half of 2013, from $26,560 in the same period last year, while, for Suezmaxes, the average time-charter rate fell to $22,200 from $26,500, and the average spot rate fell to $17,500 from $22,900.

So far in the third quarter, VLCCs in the TI pool have earned an average of $19,400 per day while Suezmaxes on the spot market have earned $12,700 per day.

Shipping magnate John Fredriksen said last month that he does not expect a recovery in the crude tanker market for at least two years, while market intelligence firm Drewry reported that rates improved in May but the recovery was likely to be shortlived.