Following
the official reopening of the Pakistani market for tankers, the
offloading of the plethora of unsold tanker/VLCC tonnage continued at
pace last week, as interested Pakistani Buyers eagerly filled their
plots.
There were further VLCC sales concluded, gradually bringing the total
number of units sold through 2018 towards the 30 mark, a figure which
looks likely to be reached before the end of May - not even halfway
through the year - GMS said in its weekly report.
There is a noteworthy dissimilarity in pricing a VLCC versus
MR/Aframax/Suezmax types, as very few end buyers in the Indian
sub-continent are capable of opening such large US dollar value Letters
of Credit (LC).
Under the current market conditions, this can easily amount to an around $18 mill LC on roughly 40,000 ldt unit, GMS said.
Given the limited number of capable end buyers who are able to do this
(translating into a lower demand), VLCCs are discounted far more than
the average tanker for which, a greater number of buyers are
open/available to negotiate.
Moreover, VLCCs usually take between six to eight months to fully
recycle, resulting in a significant exposure for the respective buyer
who will likely endure multiple market peaks & troughs over this
period. Only a recycler with a strong financial standing is generally
willing/able to withstand these fluctuations.
Pakistan and Bangladesh - both of which have reached saturation point -
tend to be the main buyers for large ldt tonnage, while Indian
recyclers prefer smaller vessels that can be quickly dismantled, thus
minimising there market exposure, due to the generally volatile nature
of steel plate prices and currency fluctuations.
Finally, those owners who opt to sell their large ldt ships into India
for Hong Kong Convention green recycling, such as Ridgebury Tankers last
week, there is normally a large discount to contend with, compared to
conventional recycling, GMS said.
The sale of the 1999-built VLCC ‘Ridgebury Pioneer’ for a reported $408
per ldt on the basis of ‘as is’ Khor Fakkan, gas free and with 300
tonnes of bunkers ROB was said to have been concluded at a $500,000
discount.
Other deals reported by brokers included the 2000-built VLCC ‘Greek
Warrior’ sold to undisclosed interests for $430 per ldt, ‘as is’
Singapore, gas free for man entry and with 480 tonnes of bunkers ROB and
the 2001-built VLCC ‘Silver Glory’ for $436.5 per ldt with delivery
Indian sub/cont.
The 1997-built Aframax ‘Oil Runner’ was said to be sold to undisclosed
interests for $470 per ldt, ‘as is’ Khor Fakkan with 70 tonnes of
bunkers ROB and with various equipment, including two propellers.
In addition, the 1999-built LR1 ‘Amazon Guardian’ was reported
committed for $455 per ldt to Pakistan recyclers, ‘as is’ Khor Fakkan,
gas free for hot works and with 400 tonnes of bunkers ROB.
Finally, the 1991-built MR ‘Divine Mercy’ was reported sold to Pakistan interests for an undisclosed price.
GMS has supported the publication of a booklet entitled - ‘The Recycling of Ships’ - written by consultant Nikos Mikelis.
It contains a list of the world’s recycling facilities and chapters on
the economic drivers behind the decision to recycle, sale & purchase
with end-of-life ships, the Hong Kong Convention, EU Ship Recycling
Regulation and standard improvements within the ship recycling industry.
The booklet is available to download as a pdf at www.gmsinc.net
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