Dire start to the year for crude tankers

Crude tankers have started 2021 in terrible fashion with no traditional winter warm-up in rates. New York-based tanker broker Poten & Partners warned in a new report VLCCs, suezmaxes and aframaxes are showing negative time charter equivalents (TCEs) on one or more of the benchmark routes.

The malaise is likely to last for the opening six months of the year, Poten suggested in its most recent weekly report.

For 2021, scheduled deliveries are more than double the 2020 numbers

“For 2021, scheduled deliveries are more than double the 2020 numbers and even though we expect delays and a pickup in scrapping this year, it does not look well for the tanker market until the second half of 2021 when oil demand recovers,” Poten warned.

Commenting on the possibility of VLCCs trading for TCE negative returns, Dr Roar Adland, shipping professor at the Norwegian School of Economics, stated via LinkedIn such actions were unlikely. 

“The only reason for not refusing such business might be to maintain a relationship with the charterer, but the tanker spot market is a bit like a series of one-night stands. No long-term love there,” Adland wrote. 

Increased tanker scrapping is viewed as inevitable by many analysts. Braemar ACM notes 85 vessels – made up of 46 VLCCs and 39 suezmaxes – are currently overaged, which by Braemar ACM’s definition is 20 years or older, most having fallen into this age bracket over the last two years.

A fast ageing VLCC and suezmax fleet will add another 20 VLCCs and 13 suezmaxes to the 20+-year fleet this year before taking future removals into account.

“A larger overaged fleet, on balance, will very likely drive many more of the currently trading vessels to the scrap yards or to seek employment outside international oil trading,” Braemar ACM suggested in a new report.

Splash reported last week on how 2021 has got off to a brisk start scrapping-wise with three VLCCs already sent for demolition, three times as many as were scrapped in the whole of 2020.

In other tanker data news, brokers Gibson are estimating that by the end of the year, 40% of all VLCCs will have had scrubbers installed.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.
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