Market dynamics, shipyard perspectives, and future outlook in the OSV industry

Market dynamics, shipyard perspectives, and future outlook in the OSV industry

The demand for OSVs is rising, driven by the offshore wind industry's growth and the need for vessel support in regions such as Latin America. The limited availability of suitable platform supply vessels (PSVs) and anchor handling tug supply units (AHTS) in the global fleet has led to increasing day rates and resale values for OSVs. However, the lack of new vessel construction in the past decade has further exacerbated the supply-demand gap.

Shipyard perspective:

During the conference, shipyard professionals from China, Europe, Brazil and Vietnam revealed that there are no new orders for PSVs. The shipyards are occupied with other projects and lack immediate capacity to build OSVs. Some shipyards estimated availability for OSV construction in 2026 or even 2028. Additionally, financing for oil field support vessels is harder to obtain compared to offshore wind support vessels.

Demand and resale market:

Representatives from OSV companies expressed interest in purchasing additional vessels, but the resale market has become significantly tighter, resulting in higher resale prices. The limited supply and increasing prices have posed challenges for vessel managers looking to expand their fleets.

Shipyard prices:

Building new PSVs comes with varying price tags across different regions. The US and Brazil have the highest prices, ranging $85-90 million for a 5,500 dwt PSV. In Europe, the cost is about $50-80 million, while China offers the most competitive prices at approximately $40-50 million. These prices are considerably higher than those observed during the previous major build cycle of OSVs from 2008 to 2014.

Future outlook:

While the OSV market faces challenges, there are potential opportunities for the fleet in other industries such as offshore wind, space launches and navies. Dynamic positioning systems make modern OSVs valuable for various ventures. However, the future of the OSV fleet remains uncertain, and the industry must carefully manage supply and demand to avoid overbuilding and maintain stable values.

The OSV market is experiencing a tight supply-demand situation, driven by increasing demand and limited vessel availability. Insights from both conferences, OTC and OSJ, shed light on shipyard perspectives, demand, resale market conditions, and shipyard prices. While challenges persist, the industry has opportunities to explore new sectors and ensure the sustainability of the current fleet. By avoiding overbuilding, the OSV market can maintain stability and navigate the cyclical nature of the oil service industry.

This article was published by S&P Global Commodity Insights and not by S&P Global Ratings, which is a separately managed division of S&P Global.