Product tanker newbuilding contracting drops 86% to nine-year low: BIMCO

“Between January and August, product tanker newbuilding contracting dropped 86% y/y to 2.6 million deadweight tonnes (DWT) representing a nine-year low,” says Filipe Gouveia, Shipping Analysis Manager at BIMCO.

The development (see graph, surce Clarksons) marks a stark reversal from the boom seen in 2023 and 2024. During those years, ships in the LR2 and MR segments dominated the order book. A pick-up in contracting for LR1s was also notable since this segment’s fleet has been shrinking so far this decade. This caused the order book to peak in November 2024 at 42.2 million DWT, the highest since 2008.

Since the start of 2025, the product tanker order book has shrunk by 12%. Currently, LR2 ships account for 48% of the DWT capacity on order, followed by 37% for MRs and 13% for LR1s, the remaining being in the handysize segment. Contracting decreased across all segments and although MRs fared the best, they still fell 76% y/y.

“Despite the slowdown in contracting, the order book remains large at 37.2 million DWT, equivalent to 19.2% of the product tanker fleet. This will lead to an increase in deliveries over the next two years which could pressure freight rates further and encourage recycling of older ships,” says Gouveia.

“Product tanker contracting could remain low in the near term amid the large orderbook and a weak long term demand outlook," he adds. "According to the International Energy Agency, demand for global refined products could grow marginally in the short term and peak in 2027. A continued shift towards electric vehicles is expected to negatively impact gasoline and diesel demand at a rate that exceeds the growth in demand for naphtha and jet fuel.”