Tanker scrapping during 2016
won’t go down in history for breaking any records. With most ship owners having
relatively young fleets after the investment spending of the past few years and
the hope that the market’s slowdown would turn around on the back of increased
demand, demolition activity was limited. After all, earnings remained in
healthy levels, so there was no actual urgency among ship owners. In its latest
weekly report, the first of the new year, shipbroker Gibson said that “without
the sale of two VLCCs in the final quarter of last year, “tanker deadweight
recycling totals would have been only slightly above the 2015 final figure. In
deadweight terms tonnage sold for demolition in 2016 amounted to 2.46 million
tonnes, just 33 units (25,000 dwt+). Once again healthy earnings across most
tanker sectors did little to encourage scrapping”, said the shipbroker.
According to Gibson, “the
extremely young age profile of the tanker fleet also discouraged scrap sales
and newbuildings entering the market were initially absorbed with minimal
impact until the latter half of the year. In contrast, demolition sales of bulk
carriers and the container ships contributed around 350 and 200 units
respectively, as poor trading conditions continued to dog these markets. The
collapse in scrap prices which started in 2014 continued and by January last
year, lightweight prices on offer had fallen to below $300 tonne for tanker
tonnage”.
The shipbroker added that
“over the final few months of 2016 lightweight prices started to recover, but
failed to attract an influx of new tanker candidates despite softer tanker
earnings. However, scrap values for India/Pakistan are still considerably below
the circa $500/tonne range witnessed in September 2014. Of the 33 tankers sold
last year, Pakistan breakers took exactly one third, followed by India with 8.
The oldest vessel sold for scrap was the Suezmax LEO (built USA 1978), which had
been shuttling crude around the US Eastern seaboard for a couple of years.
While the youngest, the VLCC XIN PING YANG (built 2001) just made it into 2016
figures, reportedly bound for Chinese breakers. In October, the tanker PROGRESS
(built 1994) had the distinction of being the first “trading” VLCC to be sold
for scrap for exactly two years. One interesting point is that 10 of last
year’s sales were for disposal of single-hull tonnage, many of which had been
lying idle for some time. In addition to the two VLCC sales, one Suezmax and
seven Aframax were sold for disposal”.
Gibson noted that “for 2017
we anticipate tanker markets to be more challenging across most all sectors.
The production cutbacks announced by OPEC back in November are due to be
implemented from this month onwards. In addition, the influence of the 240
newbuildings which entered the fleet over 2016, and those still to be delivered
over the coming months will also impact heavily on the tanker market. We also
believe that the recent legislation on Ballast Water Treatment for
implementation from September this year and the new lower sulphur limits from
2020 will all influence owners decisions whether to scrap although many owners
may hold off to see if there will be exemptions or waivers applied. However,
the expense of putting a vessel through 3rd special survey, coupled with the
high additional costs associated with the new environmental regulations will
provide owners with considerable food for thought over the coming months. NB:
The VLCC VARADA BLESSING (built 1993) originally sold to Pakistan breakers in
July 2014 but since detained under arrest in Hong Kong. The vessel has
subsequently been re-sold for demolition in China and has not traded in the
market since 2014. She has been excluded from our 2016 sales figures”, Gibson
concluded.
Meanwhile, in the crude
tanker market this week, in the Middle East, Gibson said that “a sharp VLCC dip
before Christmas followed by a mid-holiday rebound that now has turned into a
dead-cat bounce with rates sliding to as low as ws 60 to the East and low ws
40’s to the West. Owners will be hoping for some late January volume relief,
but whether the remaining ammunition will prove sufficient to re-fire the
market is open to question. An increase in Far Eastern delays would help.
Suezmax interest was dominated by short haul trades, and although there was
initially a large amount covered, The ‘quality’ of the trade kept a lid on
rates that then began to ease off to 130,000 by ws 90 to the East and little
better than ws 50 to the West. Aframaxes moved through a dull period and rates
steadily ticked lower to just under ws 90 to Singapore with little early change
likely”, the shipbroker concluded.
Source: Hellenic shipping news.
09 January 2017
No comments:
Post a Comment