Performance Shipping Inc. (NASDAQ: PSHG) announced that it has signed two new‑building contracts for 158,000‑DWT Suezmax tankers with China Shipbuilding Trading Co. Ltd. and Shanghai Waigaoqiao Shipbuilding Co. Ltd. The vessels are scheduled for delivery in October 2028 and May 2029, respectively, at a contract price of US$81.5 million per ship. The payment structure includes a 15% upfront payment upon receipt of a refund guarantee, 10% payments at steel cutting, keel laying and launching milestones, and the remaining 55% upon delivery.
Performance Shipping’s recent financial results show a mixed picture. In Q4 2023 the company posted a net income of US$25.0 million, up from US$23.8 million in Q4 2022, while full‑year 2023 net income reached US$69.4 million. Despite these earnings, the company’s three‑year revenue growth has declined 72.6% and its Altman Z‑Score sits at 1, indicating potential financial strain. The new contracts therefore represent a substantial capital outlay that will need to be financed through a combination of debt, equity, or internal cash flows, although the company has not disclosed its financing plan.
The newbuilds are intended to double PSHG’s exposure to the Suezmax segment, complementing its existing Aframax and LR2 fleet. Management views the contracts as a way to shift the company from spot‑market volatility toward long‑term time‑charter agreements with major oil customers, which can provide more predictable revenue streams. The Suezmax market is expected to experience a favorable supply outlook, with roughly 25% of the global fleet projected to be over 20 years old by 2028 and nearly half of the fleet lacking eco‑compliance. Coupled with steady global energy demand and geopolitical shifts reshaping trade flows, the company believes it can secure attractive employment for the new vessels well before their delivery dates.
"The signing of these two Suezmax newbuilding contracts expands our presence in a segment with constructive medium‑ and long‑term market fundamentals," said CEO Andreas Michalopoulos. "Our fleet is primarily comprised of Aframax/LR2 vessels, and with two Suezmax tankers currently on the water, this transaction is poised to double our exposure to the segment, reflecting our disciplined capital allocation approach and confidence in the Suezmax market." He added that "upon delivery in October 2028 and May 2029, approximately 25% of the global Suezmax fleet is expected to be over 20 years of age, while nearly half of the fleet will consist of non‑eco vessels, supporting a favorable long‑term supply outlook. Coupled with consistent growth in global demand for energy, geopolitical developments reshaping trade flows, and increasing ton‑mile demand, we believe this environment will allow us to secure attractive employment for these vessels well ahead of their respective deliveries."
The contracts underscore PSHG’s commitment to fleet modernization and environmental compliance, as the new vessels will be Tier III, scrubber‑fitted, and meet the latest fuel‑efficiency and environmental standards. While the company has not yet disclosed how it will finance the approximately US$163 million total contract value, the strategic benefits of expanding into the Suezmax market and securing long‑term charter agreements are expected to enhance the company’s revenue backlog and support its broader growth strategy.
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