But apart from that I use the word grind in this presentation, I do believe [technical difficulty] in the firming grind on utilization, and this is going to continue. I still think we’re going to have the seasonal kind of slowdowns and seasonal upward movements, normally has to come into the summer season with refinery turnarounds and so forth. But I think it’s quite kind of positive to see how quickly the VLCC market went for say, from $35,000 to $40,000 a day, going all the way up to 90 — north of $90,000 per day. And this is for [indiscernible]. And then obviously falling back [technical difficulty] this market, when kind of the parents of certain type pockets come this market is on fire. So I think the general — we’re only receiving one VLCC this year, and potentially 5 to 6 VLCCs next year.
It’s many, many, many years since we’ve had the [technical difficulty] supply growth and we’re losing quite a few vessels to age. So I’m positive, but it’s very difficult to kind of gauge, are we going to go straight into $100,000 per day market? Or are we going to grind $50,000, $60,000, $70,000, it’s anybody’s guess.
Ben Mohr: Great. Thanks. [Technical difficulty] follow-up. Have we seen [technical difficulty] as it relates to the ships [technical difficulty] or do you think there is more to go?
Lars Barstad: I think there is more to go. We’re already seeing what normally used to be Suezmax cargoes going through [technical difficulty] being put together and put on the VLCC in a passing Cape of Good Hope. We’ve seen exactly the same happening in the med, kind of East med barrels that normally would go through Suez is now being put together on VLCCs. So we are actually seeing that, or expecting that VLCC utilization is going to continue to go up. And I think kind of in this slide deck, you can look at the shot where we kind of measure the amount of ships going or passing Cape of Good Hope. Yes, it has kind of plateaued and maybe potentially [indiscernible] a little bit down. But I believe this is going to just increase obviously, assuming that the situation continues to — kind of the security level continues to be as bad as it is now in Red Sea on the Gulf of Aden.
Ben Mohr: Thank you.
Operator: Thank you. We are now going to proceed with our next question. And the question come from the line of Jonathan Chappell from Evercore. Please ask your question. Your line is open.
Jonathan Chappell: Thank you. Good afternoon. Inger, you’ve accomplished a lot in a short period of time, both with modernizing the fleet and then doing that financing pretty ambitiously and quickly and in a good way that you didn’t change the LTV. As we think about 2024 in the market that Lars has laid out pretty detailed, the cash flow generation that’s coming, is their deleveraging that you’d like to see, post this whole transaction of the 24 VLCCs and the refinancing? Or are the terms favorable enough for you that you’re just happy to let it kind of amortize in any cash flow generation would then be kind of the old Frontline manner of aggressive dividends?
Inger Klemp: Yes, a you said, I mean, we are happy with that, we are deleveraging the fleet order, the [indiscernible] ordinary amortization going forward. So I mean, we are happy with this — comfortable with this loan-to-value that we have after this refinancing. If not higher at all, it’s about 53.5% something in that respect, or market values. So I think we’re happy with just — I want to say amortizing the depth going forward on a ordinary way.
Jonathan Chappell: Okay, great. And then Lars, I asked you this 3 months ago, and then you went ahead and sold 6 of your oldest vessels. How do you feel about some of the remaining older vessels in the fleet? Is there still a pretty decent arbitrage opportunity where you think you can monetize some of your older non-ECO ships [indiscernible] they maybe, and kind of help with the cash flow generation? Or do you feel like you’re pretty content with the fleet and you enter this multi year period of strength?
Lars Barstad: I’d say we’re pretty content the way we set out to be quite honest. It’s kind of, well, you called an arbitrage it is maybe, but I think the — there is a lot of risk in the elevated prices we’re seeing on second hand tonnage. So, kind of just looking at the book values are able to kind of take out here, or the money we’re able to take about book values tells us that we are at the very elevated point in the curve. So obviously, I can’t exclude anything, but we are very much or pretty content now.
Jonathan Chappell: Great. Thanks, Lars. Thanks, Inger.
Lars Barstad: Thank you.
Operator: Thank you. We are now going to proceed with our next question. And the question come from the line of Greg Lewis from BTIG. Please ask your question. Your line is open.
Greg Lewis: Yes. Hey, thank you and good afternoon, everybody. And thanks for taking my question. Lars, I was hoping you could talk a little bit about the dynamics around the new build market. I mean, we saw a competitor order a couple of that, a couple of these, I want to say last week, just kind of how you’re thinking about it, I mean, you kind of highlighted the outlook for the order book [indiscernible] really thereof and you laid out a bullish outlook for the next few years. I guess, at this point, how its Frontline thinking about the opportunities in the new build market?
Lars Barstad: That’s a very good question. It’s still so that kind of basically due to the cost of capital and the long lead times that the delivered price is kind of a bit higher than the — or actually significantly higher than the kind of list price that you pay. And I obviously note that one of our competitors ordering quite a few vessels recently at very, very — or fairly high numbers historically. I think, kind of the dynamics in shipping, and this is probably what makes shipping quite fun is that when one actor gets his feet wet, and suddenly every other actor is competing to get their feet wet as well. I think kind of the new build market has been a little bit muted for the bigger sizes for a while. And it’s almost like who’s going to go establish the new level of Korean built and Chinese built.
It’s actually been quite a lot of transactions that gone through now that seemingly is happening on kind of as per [indiscernible] levels. You see China new build being done between $115 million and $120 million. And then you see Korea, which is actually for the first time in a very long time, establishing the $128 million to $130 million for conventional vessels [indiscernible]. So, we’re obviously watching this, but a little bit from the sideline with a hope you [indiscernible] little bit busy in the last quarter and a half. So although we monitor this, we haven’t taken an active role yet.
Greg Lewis: Okay, great. And then you mentioned that the Dark Fleet or the shadow fleet, kind of curious, realizing you see a lot more data than we do. Is there any kind of way to pick up the sub sectors in that fleet? I mean, I’ve heard 700 vessels in the fleet. I don’t know — I mean, I think you said that earlier in the prepared remarks. Any kind of color around, if you had the kind of best guess, what types of vessels are in that fleet? Because I think a lot of people are trying to figure out, hey, they’re in that fleet and that means going forward, the efficiency or utilization of those vessels is going to be permanently constrained regardless of what happens. So any kind of use around that or what actually is in that dark shadow fleet?
Lars Barstad: I think you can just start with — just assuming every ship above 20 years is one way or another apart from very, very few exceptions that are storage units are playing a part in the Dark or the Grey Fleet. So that doesn’t add up to 700 ships, so you need to kind of move into the 17.5-year category as well. I think you have to understand that even though we do make quite a bit of money in tankers these days, we’re not making this. So it means that when you have a 15-year old ship, obviously, we’ll take you through class, than you need to do your 17.5-year class, then you start to think how much is this going to cost me. How many million dollars that need to put kind of in kind of trading, at least in their own fleet, or you start to look at the second hand market.
I think also the door is closing a little bit for those who’ve kind of been say, a bit frivolous in considering either selling the tonnage too. I kind of applaud the recent efforts by U.S authorities and how they’re really now tracking down and penalizing actors that are dealing with either directly or indirectly with ships that disappear into the Dark or the Grey Fleet. Also kind of the latest regulations from EU have also kind of put the pressure on this. So — but it’s kind of identifying these ships, it’s actually fairly easy, but obviously they use all the tricks in the books in order to avoid getting detected. Where we’ll see the kind of end game of this is when we start to see extended scrapping. And to this day, we have not seen that.
We’ve seen one or two ships kind of being sold for scrap. But it’s been extremely muted in that industry and that’s kind of what I would look for. To say that, okay, so this market is now gradually kind of coming [indiscernible]. And also a trigger in this market would obviously be a catastrophic environmental event. We already had that actually in the Caribbean. It’s obviously not been — well not obviously, but it’s maybe not been covered enough by the media. But they’re nobody actually knows who the ship was or who it was owned by or whatever it was, but you just have a massive sheet of oil drifting into [indiscernible]. So — but it’s — I think the easiest way of identifying these ships is basically [technical difficulty] a portion of the fleet that has doesn’t actually have normally the ticket to trade anymore, which is plenty threshold.
Greg Lewis: Okay, super helpful. Thank you for the time, everybody.
Lars Barstad: Thank you.
Operator: [Operator Instructions] We are now going to proceed with our next question. And the question come from the line of Sam Bland from J.P. Morgan. Please ask your question. Your line is open.
Sam Bland: Thanks for taking the question. First one is we look at the order book on Slide 10, and it looks very high for the LR2s, 22%. Do you tend to look at that number, just for the LR2s? Or do you somehow wrap it in with sort of crude Aframax and get one order book across the two of them, given that you can — I guess, you can try to [indiscernible]. What’s the best way you think of looking at it?
Lars Barstad: Well, that’s a good question, Sam. We’ve actually been if you follow our presentations over some years, we’ve actually been a little bit kind of confused ourselves of how we’re going to do that. The thing is that the Aframax order book for like non-coated kind of tankers is extremely limited, almost negligible. So — and since the LR2 is kind of what we’re trading. We’ve just decided to focus on it. But I mentioned that 15-year kind of — [indiscernible] not the limit. But charters tend to not prefer a more than 15-year old ship, because it’s the precious cargo, and the quality of coating will actually be reduced — the quality of the coating will reduce over the years. So the way I think about this is that kind of this vessels leaving the LR2 fleet, they become Aframax.
So that’s the Aframax fleet growth for you kind of you can almost say, and I love to that’s passing 17 years is for sure, not trading clean anymore, or at least in most cases. So, that’s also kind of why we’ve just focused on the LR2s. The Aframax fleet is obviously large and there’s a lot of various levels of quality there and various levels of trade they’re engaged in. We tend to focus on the LR2s, there’s a bit north of the 300 LR2s, and then we roll the monitor [ph] [indiscernible] who are kind of trading clean on trading dirty. And right now, at least the last intelligence I saw were about, of that 300 plus fleet, we’re at least up in 80% trading fleet in this place.
Sam Bland: Okay. And so the other one was, you made a comment earlier in the presentation around how rates sort of around Red Sea locations may have some sort of — I’m not sure you phrase it, like some kind of reset needed to kind of reflect the new trading patterns and roots. Is it like some of the disruption linked to the Red Sea, some hasn’t, it hasn’t caught up in rates yet.
Lars Barstad: Yes, it’s — no, no, it’s — you’re absolutely right, I was probably not clear. But the thing is that when you retrade and your booking of cargoes going forward, killing your shorts or lifting along so whatever you do. It’s — obviously everything is quite a few days forward, if not months. And then suddenly, you need to adjust to the fact that you can’t pass through the Suez Canal, and your freight costs will increase. So basically, freight costs will suddenly shock the arm. So oil will stay in the West, or stay in the East, because the cost element is not accounted for, in whatever kind of structure you have set up kind of on the trading side. So that takes a little bit of time before it comes together. And also you have to some extent, logistical constraints, because obviously it’s easy to take the VLCC [indiscernible] to early Europe, but which port are you going to discharge the barrels into.
