Return of tanker glut leaves investors disillusioned

[NEW YORK] Six years after shipowners ordered too many vessels before the global recession, driving down rates and leaving new ships anchored for lack of cargoes, investors are souring again on oil-product tankers in the face of a new glut.

This time around, some of the optimism was fuelled by private-equity firms including WL Ross & Co and Blackstone Group lured by bets on rising demand because of growing US and Middle East exports of oil products. Instead, chartering rates fell by a third as orders for new ships more than doubled. Wilbur Ross, the billionaire known for turning around struggling industries from steel to textiles, pulled an initial public offering two weeks ago because he said that the price was too low.

Ardmore Shipping Corp, another owner of product tankers, sold shares earlier this month for less than the value of its fleet, according to Global Hunter Securities. Shares of Scorpio Tankers, the largest owner of the vessels, dropped 12 per cent this year, compared with a one per cent gain in the Standard & Poor's 500 Index of US equities.