11 January 2018

More VLCCs to be sold for scrap

Capesize bulkers witnessed an extended lease of life during 2017, as the recovery of the dry bulk market gave little incentive to their owners, to scrap them. The same can’t be said for the tanker counterparts, with what looks to be yet another challenging year in 2018, seemingly setting the scene towards more VLCC scrappings.

In its latest weekly report, GMS, the world’s leading cash buyer of ships said that amid the holiday season, activity in the ship demolition market settled down, as ship owners and brokers took some time off, meaning that the next few weeks are bound to be characterized by slow activity. In any case the quieter weeks are perhaps rather welcomed, given what have been a frantic few weeks of recycling activity, with much of the (recycling) focus falling on the wet and offshore sectors of late.

“Moreover, even though the markets recently witnessed a flurry of early-to-mid 90s built Capesize bulker sales from the Korean market (ones that were coming off government charters and being sold for scrap), it has been remarkably quiet on the dry (and container) recycling fronts this year as freight rates in both these sectors have made decent recoveries. The general feeling is that the pain being felt in the wet and offshore sectors is set to last a little longer and even going into 2018, an expectedly large volume of VLCCs (those on storage and otherwise) seem destined to come under the torch. In fact, this year alone, the markets have seen 14 VLCCs and about 25 Aframax tankers committed for scrap so far, most of which have ended up in Bangladesh”, said GMS.

It added that “on the industry front, given the large number of tankers sold for recycling this year and a slowdown on the dry side as well, it has been an exceptionally challenging (and frustrating) period for Gadani recyclers who have found themselves regularly paying over the odds (often as the highest placed sub-continent market), just to secure any of the working (dry) units that have made it for sale thus far. In fact, for the past 3-4 months, there have been whispers that the Pakistani market will open up for tankers again, albeit with stricter gas free for hot works standards (similar to those India and Bangladesh). However, discussions / meetings with the Pakistani government and PSBA are still ongoing as to how soon local authorities will permit tankers into the local market once again, after the tragic accident which cost scores of lives earlier in the year”, GMS concluded.

In a separate note, Athenian Shipbrokers added that “with the holiday season in full swing, last week saw the demolition market quieten down in terms of activity. The Bangladeshi market remained stagnated with no considerable alterations in terms of pricing and fundamentals. In India however local buyers appeared to take advantage of the betterment of local steel plate value and currency leading to a few high-profile reported sales. In Pakistan the hard times continued as the deterioration of local currency pressed the market even more. In the Far-East, the year is expected to close with a negative sentiment, as the majority of yards remain closed”, the shipbroker concluded.

Source: hellenic shipping news. 28 December 2017

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