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Mitsui to sell older oil tankers as vessel prices surge
Disruptions are tightening shipping capacity and sending freight rates surging
(Mitsui OSK Lines)
Key Takeaways:
- Japan’s Mitsui OSK Lines plans to sell one to two older oil tankers annually to capitalize on elevated vessel prices, Chair Takeshi Hashimoto said.
- Tanker values surged as Middle East and Ukraine conflicts disrupted trade routes, tightening capacity and pushing a 20-year-old tanker’s price up 90%.
- MOL’s plan follows pressure from activist investor Elliott Investment Management, which urged vessel sales to improve capital efficiency as fleet values rose.
Japan’s Mitsui OSK Lines Ltd. is planning to sell a few of its older oil tankers to take advantage of a surge in vessel prices as the Middle East war strains shipping capacity.
“We should not miss the opportunity,” Chair Takeshi Hashimoto said on the sidelines of the Gastech conference in Bangkok on Sept. 16. “The price is quite attractive for us,” he said, adding that one to two ships would be sold per year.
READ MORE: Surging tanker rates signal a deepening global energy crisis
MOL, as the company is known, is one of Japan’s largest owners of oil and gas tankers, and operates a fleet of more than 900 vessels overall, including bulk carriers and containerships.
The strategy offers rewards, although shipowners that sell would have less control over supply chains. The wars in the Middle East and Ukraine are disrupting normal trade routes and forcing oil producers to use complex workarounds to get crude to customers in Asia and Europe, tightening shipping capacity and sending freight rates surging.
Other shipowners are scooping up vessels to ensure that they have readily available tonnage at any time. Persian Gulf nations have embarked on a tanker-buying spree so as to assert more control over oil exports through the Strait of Hormuz.
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Currently, a 5-year-old very large crude carrier can sell for about $151 million, more than a newly built one that costs $130 million, data from Signal Ocean shows. That’s because shipbuilding yards are unable to take requests for new ships until the end of this decade. A 20-year-old tanker can go for about $71 million, a 90% increase from a year ago.
Activist investor Elliott Investment Management LP said earlier this year that it took a “significant stake” in MOL as fleet values increased, and that it planned to nudge the shipowner to sell some of its vessels in order to improve capital efficiency.
Written by Stephen Stapczynski, Weilun Soon and Kanoko Matsuyama
