South Korean bulker giant Polaris Shipping has entered the bullish VLCC sector with a secondhand acquisition.
The Seoul-based shipowner, which is best known for its focus on large bulkers, has splashed out $50m on the 320,000-dwt Madison Orca (ex-A Whale, built 2010) from US investment firm Monarch Alternative Capital. The deal for the Hyundai Heavy Industries-built ship includes special survey and installation of scrubber and ballast water treatment systems.
Polaris declined to confirm the purchase and Monarch did not respond to requests for comment.
An industry player familiar with Polaris said it will take delivery of the tanker in July.
'A first' for Polaris
“The Madison Orca will be Polaris’ first-ever VLCC,” he said.
“Polaris is seeking to diversify its fleet to include large tankers and LNG vessels. It recently participated in one LNG newbuilding tender put out by a foreign oil major. But it was not shortlisted.”
Polaris is known for its large VLOC fleet that is used to transport iron ore for Brazilian miner Vale. The company also owns a pair of LR2 tankers — the 110,000-dwt Polar Ace and Polar Bright (built 2018) — that trade in Navig8's Alpha8 tanker pool.
“Polaris will also be putting the VLCC into the Navig8 tanker pool for one year. It holds an option to extend it for another year,” the source said.
The company's entry into the large tanker space has come as many industry players predict healthy VLCC earnings in the coming quarters due to slowing newbuilding deliveries, increasing long-haul trades and IMO 2020-related floating storage.
Fearnley Securities forecasts spot VLCC earnings will average $60,000 per day in 2020 and $45,000 per day in 2021.
The sale of the Madison Orca marks the end of direct shipowning by Monarch. The fund bought the vessel, which was formerly in the fleet of Nobu Su’s Today Makes Tomorrow, for $60m at an auction in July 2014. The VLCC has been trading in Navig8's VL8 pool.
Still active in dry bulk
Polaris is also looking to add supramax and kamsarmax bulkers to its fleet, according to the source.
“It is looking to charter them and operate them on spot,” he said.
Meanwhile, sale-and-purchase brokers said Polaris is selling three converted VLOCs. They believe the ships, whose names have not been disclosed, will go for demolition.
In December, Polaris was reported to have offloaded the 267,000-dwt VLOC Stellar Journey (built 1994) to Bangladesh for about $12.5m to $13m. It bought the ore carrier as the VLCC Grand for $20m in January 2011 and converted it to a VLOC.
The company has been working on an initial public offering on the Oslo Stock Exchange since last year. It aims to raise $250m to $300m to finance newbuildings, some of which will replace several of its converted VLOCs.
Polaris owns 35 vessels on the water, made up of 33 large bulkers and two LR2 product tankers. On the newbuilding front, it is awaiting delivery of 12 ore carriers of 325,000 dwt, four newcastlemax bulkers and one capesize.
