THE DETERMINANTS OF PRICES OF NEWBUILDING IN THE VERY LARGE CRUDE CARRIERS (VLCC) SECTOR

By Mustafa Nejem

This dissertation examines the determinants of prices of newbuilding vessels in the VLCC market. Factors such as second-hand vessel prices, earnings of VLCCs, sales in the sector, DWT, scrap prices, and freight rates are analyzed using historical data. The findings suggest that ship owners should consider supply and demand dynamics, as well as f

• Language: English
• Publisher: maritime
• Release date: Dec 1, 2023
• ISBN: 9781963159394

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DECLARATION

I hereby declare that the work reported in this dissertation is completely my own work unless otherwise stated, and that it has not been submitted previously for any award or degree at any other institute

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Word count: 10. 500

ABSTRACT

The aim of the proposed research study will be to identify and analyze the determinants of prices of newbuilding vessels in the Very Large Crude Carriers (VLCC) Sector. Historical quantitative data was collected from Clarksons Shipping Intelligence Network (SIN) for the time period 2000-2018 about factors that academic literature defines as factors that could influence prices of newbuilding vessels in general and newbuilding VLCCs in specific, namely prices of second –hand vessels, earnings of VLCCs, sales in the sector, deadweight (DWT), scrap prices and freight rates. Data was statistically analyzed with SPSS. Descriptive statistics were calculated, while regression analysis was also held. Based on the findings of the research, prices of new built VLCCs were increasing after 2002 and until 2008. Then, a significant drop was observed in 2009. After that point in time, the price of new-built VLCCs has been declining, with a slight increase being observed from 2017 to 2018. Prices of second hand vessels followed the path of prices of newbuilding VLCCs over the review period, while it is worth noting that in 2014 and 2015, the price of second hand VLCCs increased, a trend that was not identified in the case of newbuilding ones. Earnings per day for VLCCs were significantly fluctuated over the review period. Ship owners of VLCCs saw their revenues reaching their lowest point in the review period in the end of the period in 2018. Demand for VLCC-seaborne trade in a global context was steadily increasing from 2008 to 2018, with a slight fluctuation being observed in 2009, when demand slightly fell, before it starts increasing again from 2010 and on. Following the path of demand, supply of VLCCs was also steadily increasing from 2000 to 2018. The scrap price at which VLCC were sold during the review period fluctuated to a considerable extent. Scrap prices for VLCCs reached their peak in 2010, before starting falling until 2016, while, after a short increase in 2017, VLCC scrap prices