Not specifically but finished product is the tail and raw crude is the dog. As we know, the tail rarely wags the dog. I've spent a lot of time looking to get long, but I think that you have plenty of time. (as in 2015 or so) to do it. Tanker and bulker markets are the ultimate leverage play, financial and operating. Ships are financially leveraged 80-20 or so. Transport costs, at almost any price, still make up only a fraction of the price of the product being shipped. As such sipping costs are quite price inelastic, which gives shippers tremendous pricing power in times of excess demand. A VLCC carries about $210,000,000 of oil (at 100 dollars a barrel) That's why producers were able to pay $200,000 a day in the spot market.
The supply of new ships is very inelastic in the short run, but once excess capacity is in place the leverage swings hard the other way. It takes about three years to bring on capacity (from order to delivery) but about 25 years to get rid of it. And shippers will lease at any rate that provides less of loss than laying up a ship. The only thing they won't do is lease at a rate less than voyage cost.
Good luck. But if you think things can't get worse, you may be in for an unpleasant surprise (starting with the dividend.)
Ghost's point was that the new build conversions are going to help address the continuing supply glut you site in business that is SPECFIC to DHT.
I.E. LNG tankers can not compete for crude loads. Neither can gasoline/product tankers.
The more I read your posts, the more I realize you have done no name-specific work on this company, and while you may be smart, you obviously suffer from the same ego problems as a few others on this board (including myself, but, at least I will argue the issues other raise rather than continue blowing hard off the same soap box).
Here's some math for ya Liebniz. DHT didn't talk about it much in their dog and pony show. In less than 1 year the entire DHT fleet of Aframax and VLCC comes off the OSG charter (in fact, 1/3 come off April 17th. ) Math question number 1-How many days is that from today?) Currently DHT getting 33-38k a day for vlcc and 21k for Aframax
Current Time Charter Rates $/day (theoretical) 1 Year 3 Years VLCC $20,250 $25,250 Suezmax $16,000 $19,000 Aframax $13,250 $16,250 Panamax $13,500 $14,750
Math question number 2 - Figger out how much less DHT will be making this time next year you may assume the expiration of the OSG leases, three on April 17th another in July, another in October and another in Jan 2013, Please assume they manage to enter into TC deals (I think their credit agreement prohibits TC's in excess of 1 year but, I defer to your superior intellect). Please post the results in a manner "us" lesser mortals can understand -- per day, per week, per year, whatever is easiest for you and then get back to "us." Per year would be helpful, multiplying by 52 or 365 is very difficult for "us"
Oh and if you're interested, and think the spot mkt is a better option, the current spot for Aframax is about 10k but, unlike TC deals, DHT has to pay for fuel (ouch), port and canal charges. It's about 22k (smoothed for seasonal influences) for VLCC's (again, less costs not apportioned in TC mkt).
In addition, if you would be so kind as to apply your superior skills to another endeavor, (math questions 3 and 4,) please calculate the remaining useful life and current mkt value of DHT's fleet and get back to "us" with the results. Thanking you in advance.
Who said anything about LNG? There is not enough new build demand for product tankers to change the dynamics of the market. LNG is a class by itself. In fact a class of about 192 ships in the worldwide fleet as I recall. Perhaps you should do some elementary reading on the subject but then again why would you? Much easier to be a cyberpunk.