Econometric Modeling of Second-hand Tanker Prices

Abstract

Purchasing second-hand tankers can expand size of tanker fleet in a short term, especially for Chinese fleet, which can not satisfy the imported crude oil demand. A second-hand tanker price is an important factor in the process of the decisions to purchase of second-hand tankers. In this paper, an econometric modeling of second-hand tanker prices is constructed based on the analysis of independent variables. By the regression analysis of the second-hand prices of Aframax, Suezmax and VLCC, the model is proved to be scientific and reasonable. From the results of the model, it is found that new building ships, scrap prices and time charter rate have greater effect on the determination of second-hand prices than others. All variables influence the second-hand ship prices positively, except for order book of new vessels /fleet number and interest rate which only affect the second-hand prices of VLCC negatively. At last, employing the model, this paper calculates the second-hand tanker prices of the three kinds of ships, and analyses the fitted value, which is preferable.