The liquidators of failed Singaporean tanker owner Xihe Holdings have sold for recycling an elderly VLCC that has been used in a storage role off the city state for several years.
The 309,300-dwt Sea Latitude (built 2001) is one of very few VLCCs sold for demolition this year.
Ralph Leszczynski, Bancosta's head of research, told TradeWinds that so far only five VLCCs have been confirmed as having been scrapped in 2021 despite several more reported deals.
"There is a bit of a lag of a month or two in the statistics compared to the 'market rumours', but avoids situations where cash buyers buy vessels only to hang on to them for further trading, which is certainly not unheard of," Leszczynski said.
"This is still very few, although an improvement on 2020 when we had only two VLCCs scrapped in the whole year, and on 2019 with four VLCCs. However there were 31 VLCCs scrapped in 2018. The average of the last 10 years is 10 VLCCs scrapped per year," he added.
According to tanker sources, most VLCCs scrapped this year were last used as storage vessels, their disposals coming as rising crude-oil prices decreased the need store oil at sea.
The Sea Latitude has been used for storage since January 2017, when it was acquired by Singapore-based Sea Oriental Line, the shipping arms of commodities trader Agritrade Resources, from DHT Holdings.
Xihe, via affiliated tanker operator Ocean Tankers, bought the ship off Sea Oriental in August 2018 for a reported $22.5m.
Recycling sources in Singapore indicated the tanker was sold to cash buyers on Tuesday at $575 per ldt on an "as-is, where-is" basis, which equates to $25.1m.
"Xihe's liquidators actually made a decent $2.6m asset-play profit on that ship," one broking source said.
Destination Chattogram
The price paid suggests that Bangladesh is where the Sea Latitude is most likely to be recycled, market sources said.
The ship was sold through a tender process conducted by brokers that was said to have attracted strong interest from cash buyers who face a scarcity of large tonnage.
Leszczynski said there are currently 50 VLCCs trading that are 20 years or older, which equates to 6% of the trading fleet.
"There is quite a lot of pent up scraping potential and I'm actually surprised that so few are being scrapped," he said.
"Of course, a lot of old VLCCs have been used for floating storage and, reportedly, for shadowy Venezuela and Iran trades. However, floating storage has been steadily unwinding in recent months and is no longer anywhere near the levels it was in mid 2020."
The Sea Latitude sale leaves only one unsold Xihe-owned VLCC, the 318,600-dwt Wu Yi San (built 2012), which is due to be auctioned in Singapore on 4 January.
As a relatively modern vessel built to high specifications, the Wu Yi San is expected to attract strong interest from trading buyers, who have over the past year quickly snapped up similar Xihe VLCCs when they were became available.
