Ridgebury Tankers' apparent appetite for veteran VLCC tonnage suggests it is too early to expect shipowners to scrap crude tankers at 17.5 years of age, a leading analyst says.
Bob Burke’s Ridgebury is understood to have bought three VLCCs from DHT Holdings and a fourth from Euronav, having raised money to double its foothold in the VLCC market.
At the time of writing, some brokers were also connecting Ridgebury to a fifth vintage VLCC in a busy week, the 309,500-dwt Meandros (built 200) owned by Sun Enterprises.
DHT has today confirmed the sales of the 299,000-dwt DHT Utah and DHT Utik (both built 2001) and the 309,000-dwt DHT Eagle (built 2002) and Euronav the 298,000-dwt Artois (built 2001).
Ridgebury Tankers has not commented directly on any acquisitions.
Nicolay Dyvik of DNB Markets says the trading sales confirm his thesis that only 20-year-old VLCCs are likely to be scrapped in 2018 and 2019.
Dyvik notes that the DHT Utah was sold at $5.5m above its scrap value, based on VLCC demolition sales by Tsakos and Angelicoussis of late.
Once the cost of the 17.5 year special survey is factored in, the price it is still $2.5m above demolition levels.
Dyvik explains that this sum shows it would make sense to take the tanker through a 17.5-year docking and trade it in hope of a market recovery.
He notes that the drydocking schedule for the four tankers sold by Euronav and DHT show the first ballast water management system would not need to be installed before the DHT Utah goes into the dock in December 2020.
“By that time we argue the ship will be scrapped, which means that DHT Utah would most likely trade as a tankers for another 3.1 years,” he said.
At the same time, should the market pop to a level of modern VLCCs harvesting $50,000 per day, the older tankers would collect EBITDA of $3.1m per quarter.
This shows the operational leverage if the tanker market were to improve during the next three years, Dyvik said.
“The above sales suggests that it is too early to be overly optimistic on 17.5 year-old VLCCs being scrapped,” he concluded.
