Two Asian-owned VLCCs that have been deployed in storage roles off Malaysia for many years have joined the steady stream of veteran tankers heading to the Indian subcontinent for recycling.
Tanker brokers believe the demolition sales of Xihe Holdings’ 298,000-dwt Sea Coral (built 1996) and Nathalin Group’s 310,000-dwt Jubilee Star (built 1996) will be followed in the coming months by even older VLCCs that are ending storage contracts and are unlikely to return to active trading.
Sellers of the Sea Coral and Jubilee Star have been able to cash in on near record high scrap price levels.
The Jubilee Star was sold on an “as is” basis off Tanjung Pelapas at $572 per ldt, which brokers said netted Nathalin subsidiary Prima Marine $24.5m in total.
The Sea Coral, which went under the hammer at a Malaysian court auction, sold for $24.7m. This equates to $578 per ldt, which bucked the usual trend of auction prices typically coming in at less than market level.
Neither ship was sold on a gas-free basis and it is unclear whether they will head to recycling facilities in Pakistan or Bangladesh under their own power or under tow.
With these two deals concluded, VesselsValue indicates that eight dedicated storage VLCCs have been sold for recycling since the beginning of 2021.
An additional five regular VLCCs have also been sold for scrap, some of which were used as temporary storage towards the end of their active careers.
Only one secondhand transaction involving a dedicated storage VLCC has been concluded so far this year — a deal that saw Prima Marine acquire the 307,000-dwt Phoenix M (built 1999) from Mercuria for an undisclosed amount in early July.
In 2020, when demand for storing crude at sea was strong, no dedicated storage VLCCs were sold for scrap, while two were offloaded to secondhand buyers.
Maritime Strategies International (MSI), in its August market report, indicated that VLCC storage capacity fell from a high of 25m dwt in August 2020 to just under 10m dwt at the end of July 2021.
MSI analysts said the crude tanker market was still oversupplied, with lower crude trade volumes and the market no longer enjoying the temporary support from the floating storage and port delays seen in 2020.
Tanker sources in Singapore said the majority of storage VLCCs are currently holding inventory for fuel oil traders and suppliers, but very few — if any — are storing crude oil for contango plays.
This story has been amended to reflect that five non-storage VLCCs have been sold for recycling.
