Beware of Covid Ghosts

Although the tanker market is still in the lows, there has been activity in the sale of secondhand capacity (Ocean Yield, Okeanis, Frontline) with firmer prices, always an advanced signal of a better market. FRONTLINE acquired two 2019 scrubber fitted VLCCs at 90 mil $ a piece vs 88 mil $ expected.

With OPEC + meeting on Thursday and given the oil price, probably going to pump a few 00,000 more barrels a day we can expect a good impact on day rates. There are also Covid 19 threats and bottlenecks to take into account. On the positive side, the accrued maritime traffic and the low level of waters in Panama Canal has considerably slowed the Canal traffic to a point where it may become better to go around the Cape Horn. Obviously, this is positive for the ton mile equation of shipping. On the negative side, we heard through our shipping experts about the Covid 19 linked restrictions affecting two Chinese harbours. Yesterday’s price action of Cruise liners and tankers are a warning reminiscence of what happened in March 2020 and an abrupt stop to the reflation trade. This is the only short term black spot for the commodity and thus shipping Supercycle to come.

One area of great interest is the Wind Tower Installation Vessel segment. With only 6 to 7 vessels able to install the 14 MW new turbines, and 20,000 of them to erect by 2030 according to the Government plans, It would take 30 years and not 10 to reach the target. We foresee a decade of high day rates for these vessels and the lucky ones such as ENITI, CADELER, BONHEUR, OHT and CFE (ACKERMANS VAN HAREN) are going to enjoy the best of times, especially in Asia and in the USA. The New Offshore Wind challenge in the USA is going to be as buoyant for the WTIV industry as for the offshore drillers in the early days of the Gulf of Mexico Oil exploration boom.