Supply looks reasonably benign at present. Orderbook at 3% of active Middle East fleet as mentioned. Additionally, I have heard there 10-15 vessels due for delivery globally (will have to check exact number) over the next 18 months or so, which is actually a slowdown vs last year, which was slower than the year before and both the last two years which got absorbed fine. There’s also 14 vessels over 40 in the fleet in the Middle East as an example, which should be retired over time.
On the cyclical peak: demand drivers look strong (Offshore CAPEX budgets, offshore wind maintenance needs etc.). New vessel economics only seem to be making sense again recently and rates are still meaningfully below say 2015 despite increased costs of building new vessels so haven’t heard anything too worrisome there as of now. I would point you to LZ’s piece in July 7 for additional detail.
Both are key questions and as and when I find out more, I will be sure to update!
Do you expect any significant changes in supply over the next year?
This sector is new to me, but I’ve heard it is super cyclical. What makes you believe this is not trading at the cyclical peak?
Thanks!
Thanks for the questions.
Supply looks reasonably benign at present. Orderbook at 3% of active Middle East fleet as mentioned. Additionally, I have heard there 10-15 vessels due for delivery globally (will have to check exact number) over the next 18 months or so, which is actually a slowdown vs last year, which was slower than the year before and both the last two years which got absorbed fine. There’s also 14 vessels over 40 in the fleet in the Middle East as an example, which should be retired over time.
On the cyclical peak: demand drivers look strong (Offshore CAPEX budgets, offshore wind maintenance needs etc.). New vessel economics only seem to be making sense again recently and rates are still meaningfully below say 2015 despite increased costs of building new vessels so haven’t heard anything too worrisome there as of now. I would point you to LZ’s piece in July 7 for additional detail.
Both are key questions and as and when I find out more, I will be sure to update!
Thanks for sharing! If supply doesn't catch up, this sure looks interesting!