Low tanker rates are pushing increasing numbers of old VLCCs to the scrapyard, but not enough to counter deliveries of new vessels, shipping brokers said.
"Depressed VLCC rates seem finally to be taking a toll on the mid 70s built fleet of large tankers," Norwegian broker Bssoe said in a report for November.
Nine VLCCs were sold for demolition during November, taking the total this year to 29 units, compared with 14 by the same time last year, the broker said.
But 25 new VLCCs have been delivered this year and a further 10 are expected.
"The supply side of the VLCC equation is more or less unchanged," the broker said.
Brokers have been praying for higher scrapping levels this year as freight rates have tumbled. But despite incentives being available, tanker demolitions have not taken off.
Scrap prices and ship fuel prices are near year highs while freight rates show no signs of recovery.
As a result it is uneconomic to operate many old turbine-powered vessels or take them through 25 year special surveys which may require substantial repair work.
"But there are still too many owners who should be dumping ships," another broker said.
Scrap prices are generally around $135/ldt (light displacement tonne) in India and Pakistan and around $132-133 for Bangladesh and $128-130 in China.
India has been particularly active and higher rates have been available for sellers taking VLCCs on an 'as-is' basis in the Middle East
and cleaning out tanks ready for cutting work.
But India only has room for a few more VLCCs before demolition slots will be filled until next March, Bassoe said.
Bangladesh may also be nearing saturation, although China is said to be keen on taking tonnage. - (Reuters)