GMS anticipates further swathe of VLCC scrapping

GMS, one of the world’s largest buyers of ships for recycling, is predicting a swathe of VLCCs will head for scrap as the tanker downturn lasts longer than many had expected.

In its most recent weekly report, GMS stated: “The general feeling is that the pain being felt in the wet and offshore sectors is set to last a little longer and even going into 2018, an expectedly large volume of VLCCs (those on storage and otherwise) seem destined to come under the torch.”

GMS noted that in 2017 14 VLCCs and around 25 aframaxes have been committed for scrap so far, most of which have ended up in Bangadesh.

Bangladesh is currently being outbid by recyclers in neighbouring India however, with GMS saying Indian recyclers are willing to pay $440 per ldt for tankers at the moment.

Clarksons Research noted in a report out last week that 10.7m dwt of tanker tonnage has been scrapped this year, more than four times as much as last year, accounting for 31% of total tonnage scrapped in the year to date

Fitch Ratings had a negative outlook for tankers in a sector outlook report issued earlier this month.

The tanker shipping segment is the most exposed of the main shipping sectors following a glut of new vessel deliveries in 2017, Fitch claimed.

Fitch expects demand for tankers to grow by around 4% in 2018, roughly matching the expected growth in tanker supply.

Speakers at last month’s Maritime CEO Forum were confident that market fundamentals would ensure a significant tranche of the tanker fleet heading for scrap in 2018.

“By 2018, about 4.4% of the tanker fleet will be over 20 years old, which will force a new round of scrapping,” said Henrik Hartzell, managing director of Heidmar (Far East).

In an ongoing poll carried on this site, a slim majority of readers believe freight rates for tankers will be better in 2018 than this year.


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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