The return of former Ocean Tankers-linked VLCCs to the active fleet is having a negative effect on already depressed tanker rates, a top US shipbroker said.
Their return comes on top of the unwinding of additional floating storage, increased newbuilding deliveries and a lack of scrapping as marginal buyers continue to pay premiums over scrap for vintage tonnage.
“The return of Ocean Tankers' fleet has added further pressure to the already oversupplied VLCC tanker market,” McQuilling Partners said.
“We expect the freight support from stronger demand to largely be offset by a substantial supply imbalance, and the bearish market sentiment is likely to continue into the third quarter.”
The arrest of the Ocean Tankers-operated fleet in 2020 and its subsequent bankruptcy proceedings saw the company’s VLCC fleet arrested at various ports by creditors. Sister company Xihe Group owned the ships but ended up in a similar court-supervised insolvency process.
According to Ocean Tankers' official website, it operated a fleet of 14 VLCCs and four floating storage units prior to its collapse.
“In the fourth quarter of 2020, we began to see these vessels getting sold, with four of them back into the trading fleet under new ownership before the end of the year,” McQuilling said.
The broker identified those four ships as the 318,000-dwt Maran Lyra (ex-Tai Hung San, built 2010) and Maran Lupus (ex-Tai San, built 2009), which were sold to Maran Tankers of Greece, as well as the 319,000-dwt Cyan Nova (ex-Wu Tai San, built 2011) and Cobalt Nova (ex-Kun Lun San, built 2011), which are now in the fleet of Zodiac Maritime.
McQuilling said the former Ocean Tankers vessels continue to rejoin the trading fleet moving into 2021, with at least another six sold in the secondhand market.
“Given the size of a single VLCC, even small numerical adjustments in the total number of ships in the fleet tend to have a meaningful impact in the tonne-mile demand and supply balance — something that inevitably spills over to the smaller classes as well,” the shipbroker said.
McQuilling said it counts only two Ocean Tankers-linked VLCCs — the 309,000-dwt Sea Latitude and 298,000-dwt Sea Horizon (both built 2001) — as still at anchor in South East Asia. The rest of the fleet was sold or is currently underway, according to AIS data.
TradeWinds recently reported that Zodiac Maritime had acquired a fourth VLCC from the collapsed Singapore tanker player, with the acquisition of the 318,000-dwt Jiu Hua San (built 2009) for almost $37m.
Zodiac bought the 318,500-dwt Long Hu San (built 2013) last year.
