Time to buy the dip in LR1 Tankers? April 23, 2018|Court Smith

Asset values remain depressed across the clean Tanker markets, creating buying opportunities for prime age tonnage. Younger ships provide investors with an asset that is well placed to appreciate when the shipping markets do turn. LR1s have been unfashionable as of late due the smaller number of ports at which they can call relative to their prime competition, MR2s of around 50,000 DWT, which are more flexible in their delivery options. Asset values have rebounded somewhat but remain below their long term median value. 

However, ton mile demand for the larger Crude Tankers have risen over through late 2017 and again in March of this year. Low hire rates appear to be creating new trading opportunities for these vessels. 

Clean Tankers will remain in high demand as more smaller refineries are expected to close or reduce runs following the 2020 bunker fuel switchover. Smaller refineries produce a higher amount of residual fuel oil, a product that will become far less valuable after it is no longer suitable for use as bunker fuel. This will create even higher demand for large clean Tankers who will be the shuttles from newer high efficiency refining hubs to the regions serviced by older and smaller refineries. 

The combination of low asset values and the first indications of a structural shift to higher demand suggests now is the time to consider an investment. 

Source: VesselsValue - https://bit.ly/2HL4qbU

All data valid as of 20/04/2018