Tanker owners will be hoping for more of the same as two elderly VLCCs were sold for scrap despite falling prices.

Brokers reported the 301,700-dwt Hikari (built 2003) and 281,000-dwt Kyoto (built 2000) offloaded at $606 per ldt, or $23m and $25m respectively, well below the peak of more than $700 per ldt earlier this year.

Both vessels have recently been operating in the fleet of low-profile Greek tanker manager Marbella Seaways.

Bangladeshi end-users are reported to have taken the duo.

These are only the second and third VLCCs to be demolished so far this year as older ships continue to find employment in “rogue” trading of sanctioned Iranian and Venezuelan oil.

However, the Hikari and Kyoto have been used by Marbella in a more legitimate role as storage tankers off West Africa since being acquired from Japanese owners over the past couple of years.

IHS Markit data indicates that the Hikari, formerly Mitsui OSK Lines’ Iwatesan, was purchased by Panamanian-registered Mystral Royal Shipping in March 2021. It was placed under Marbella management immediately afterwards.

The Kyoto, which was built as NYK Line’s Tenyo, was acquired by another Panamanian-registered company, Seagallop Maritime, from Thai Oil in June 2020 for $24m.

Seagallop initially placed the Kyoto under the management of Monte Nero Management but it switched to Marbella in December 2021.

Vessel-tracking data shows both are still in the Gulf of Guinea. The Kyoto has been anchored off Ghana since at least May of last year, while the Hikari recently departed the same anchorage, where it had been since December. On Sunday, the vessel’s AIS showed it heading away from the Ghanaian coast in a southerly direction at 11 knots.

Earlier this year, Adam Polemis’ New Shipping sold the 298,400-dwt New Inspiration (built 2002) in a fully gas-free condition at $665 per ldt into Pakistan, illustrating how price ideas have fallen.

Another VLCC that was believed to be heading for a demolition beach in April, Pretty Nave’s 310,000-dwt Niki (built 2000) has instead emerged as the Viki, the only vessel owned by a new company called Radiant Seaways. The ship, according to its AIS transmitter, has been anchored off the Malaysian port of Sungai Linggi since being acquired by the Liberian-registered shipowner.

Singapore-based shipbroking sources told TradeWinds that while interest in older VLCCs remains strong, buyers only want vessels that are actively trading.

VLCCs that have seen prolonged use in storage roles are attracting little interest.

Marbella, which could not be reached for comment outside of Greek office hours on Tuesday, is listed as being left with one remaining VLCC under its control. The 310,000-dwt Kioni (built 2004) has been used as a storage vessel in the Gulf of Guinea since it was acquired from NYK Line by Agavita Shipping in April 2021.

Marbella took over as its manager last December.

Biting the bullet

Demolition broker Ed McIlvaney said the constant fluctuation of steel prices on a worldwide basis is a persistent reason why price levels continue to see-saw.

Other factors not assisting the market are the rising interest rates recyclers are facing, and the constant battle that local currencies in the four major sectors continue to fight against the dollar, he added.

“It is, however, good to advise that after a few weeks of no fresh sales being reported, we are at least able to report some sales which show us where the current market ideas are,” he said.

“Despite most shipowners and cash buyers continuing to show a reluctance to accept these levels, it is good to see that some owners are at least willing to bite the bullet and recycle their units while rates remain strong.”

Cash buyer Best Oasis said steel prices continue to correct worldwide, leaving ship recyclers in a state of confusion, as they are unable to provide a firm offer in such volatile conditions.

“While the lack of units available in the recycling market coupled with sharply declining inventories in the recycling yards are strong enough reasons for end buyers to offer competitive prices in order to secure tonnage, there remains a huge gap between the price expectations of sellers and buyers,” it cautioned.

Offers from recyclers in India and Bangladesh softened further in line with their domestic steel prices, whereas offers from Pakistan remained stable due to the limited supply of scrap in the domestic market, Best Oasis added.

“It remains to be seen at what level both sides will converge and shake off the sluggish market,” it said.