With an average age of 23.8 years, the fleet of very large ore carriers (VLOCs) converted from very large crude carriers (VLCCs) are vintage compared to similar ships. The average age for a non- converted ore carrier above 200,000 dwt is 5.7 years in comparison. However, a leading analyst says there is little economic rationale to scrap them just yet.
BIMCO’s chief shipping analyst Peter Sand commented: “There are few acute purely economic incentives to demolish VLOCs converted from VLCCs despite the comparable high age. Some of the reasons being: still running on time charter contracts and identical prices for demolition and secondhand sale.”
Sand’s report out today comes two and a half months since the sinking of the Polaris Shipping converted ore carrier Stellar Daisy in the South Atlantic with the loss of 22 lives. Since that sinking a number of other defects have been reported on other converted ore carriers belonging to Polaris leading to speculation that Brazilian miner Vale might be in the process of changing its stance on the use of these old converted ships. Sand however observed that most of the converted VLOCs are operating profitably on fixed routes and schedules under long-term time charter contracts fixed a long time ago.
The converted VLOC fleet could carry 26% of the Brazil – China iron ore trade, according to BIMCO date. 24% of the total VLOC fleet is converted from VLCCs.
Sand pointed out that 32 new valemax ships are being built and scheduled for delivery in 2018-2019.
“At that time, many of the converted VLOCs may still be actively trading,” Sand noted, adding: “Thus, we do not expect the delivery of the valemax ships into the active fleet to be neutralized by immediate or simultaneous demolition of the converted VLOC fleet.”