Shipowners have finally been sending more aged tankers to scrap yards in recent weeks following quarters of limited scrapping, according to brokers and industry databases.
The development is expected to be welcomed by tanker bulls, as many industry experts believe that freight markets will only enjoy a sustainable recovery when more demolition occurs.
“Demolition activity has been brisk in the last few weeks for pretty much all vessel types,” Banchero Costa research head Ralph Leszczynski told TradeWinds. “For tankers, this is long overdue.”
Equasis data shows at least one VLCC, two aframaxes and three MRs have been broken up or sold in scrap deals since late March.
Those are Digifro Oil & Gas Services’ 303,000-dwt Belema Sweet (built 1996), Muhit Maritime’s 105,000-dwt Alsatayir (built 2006), Soechi Lines’ 106,000-dwt SC Ocean Li (built 1999), European Product Carriers’ 45,000-dwt Elka Nikolas (built 2001), United Shipping Management’s 41,500-dwt Disco-1 (built 1992) and World Tankers Management’s 35,000-dwt Agros (built 1996).
Brokers reported the SC Ocean Li was sold for $485 per ldt on an as is basis at Batam, Indonesia.
The Belema Sweet was reportedly sold for recycling in Pakistan, the Elka Nikolas in India, and the Alsatayir, the Disco-1 and the Agros in Bangladesh.
TradeWinds has approached the shipowners and managers for comment.
A total of 18 tankers totalling 1.34m dwt were sold for demolition in March, the highest monthly figure in tonnage terms since June 2018, according to Clarksons Research data.
Leszczynski said three VLCCs were beached and another two sold to cash buyers in the first quarter.
“In 2020, just one VLCC was reported scrapped, against an average of 11 VLCCs scrapped per year in the previous 10 years,” he added.
“So, we are at the very least back to the ‘normal’ of the past decade.”
A coming pause?
But there are doubts over whether the trend will continue.
Market sentiment has turned optimistic after Opec+ decided to hike crude production from May, even though the actual market impact is only expected to be felt later this month.
“The spectre of increasing tanker demand later in the second quarter may see less tankers scrapped than would otherwise have been the case,” analysts at Alphatanker said.
“Some owners may no longer decide to scrap their vintage tonnage.”
Moreover, cash buyers warn the operations of scrap yards could soon be affected by fresh lockdown measures in Bangladesh, India and Pakistan.
National governments in the subcontinental countries are seeking to control another wave of coronavirus infections, although the recent travel restrictions have been mostly short or limited to certain areas.
