Shipowners are reportedly selling old VLCCs at strong prices despite freight earnings remaining in the doldrums amid tonnage oversupply.
Their good fortune is due to firming demolition rates and improved sentiment in the secondhand market, tanker experts said.
In a scrap deal, Thailand's Prima Marine was reported to have sold the 299,700-dwt Darin Star (built 1994) for between $440 and $445 per ldt on an "as is" basis in Malaysia.
Brokers also said Winson Group is selling the 312,700-dwt Winson No 5 (built 2001) to cash buyer GMS for $440 per ldt on an "as is" basis in Singapore. TradeWinds understands the deal is not yet concluded.
Strong recycle market
Both ships have been used as long-term floating storage units (FSUs).
“Buyers would have needed to spend a lot of money on dry-docking if they wanted to trade vessels that were used as FSUs,” said a broker. “That would be very difficult.”
Prima and Winson did not respond to emails seeking further comment.
The reports came as demolition rates rose on the back of a bullish steel market to multi-year highs in the Indian subcontinent.
Scrapping prices for large tankers delivered into Bangladesh have risen to $485 per ldt, the highest since coverage began in October 2019, according to the Baltic Exchange.
“The subcontinent market is on an aggressive buying spree, with Bangladesh leading the game,” cash buyer Best Oasis said in a note.
“The market fundamentals are quite strong in Bangladesh with firming steel prices, which gives a required boost to end buyers to offer high prices for securing tonnage.”
GMS said FSU owners appeared to be showing more interest in recycling sales lately, but admitted the ships could be hard to handle for cash buyers.
Sludge on board such units needs to be removed before ship breakers are willing to receive them, and those cleaning operations can take weeks, the Dubai-based firm said in a note.
“No end buyer is willing to wait on a vessel with a two-month forward delivery time frame, especially as markets remain overheated at present, and with every chance of cooling off as we approach the monsoon and summer months,” GMS added.
Rising secondhand values
In the secondhand market, SBM Offshore reportedly sold the 318,700-dwt Gene (built 2003) to unspecified Chinese interests for up to $25.5m. The Dutch owner had previously deployed the ship in a Navig8 pool.
TradeWinds reported last month that Eneos Ocean had sold the 301,000-dwt Eneos Breeze (built 2003) for about $23m.
Greece’s Maran Tankers was said to have sold the 306,300-dwt Maran Cygnus (built 2001) to unknown Chinese interests for between $23.7m and $24m. VesselsValue estimated the ship is worth $22.6m.
SBM declined to comment. Maran Tankers has a policy of not commenting on commercial transactions.
Both ships are thought to have fetched above-market prices, possibly because the sellers offered prompt delivery.
Banchero Costa research head Ralph Leszczynski noted that the optimism in the secondhand bulker and boxship markets is spreading into the tanker trade.
“The tanker market is clearly still not there [rate-wise], but people are starting to think that it could be next in line,” he said.
Harry Papachristou contributed to this story
