VLCC S&P market dominated by the sale of 20-year-old vessels

So far in 2021, 13 VLCCs have changed ownership. There is nothing particularly remarkable about this – the same number changed hands in the same period in 2020.

What is significant is that eight of the VLCCs have been sold to undisclosed Chinese interests. In the same period in 2020, Chinese interests had no interest in 20-year-old VLCCs; in fact Chinese interests did not purchase any VLCCs in the secondhand market at that time.

The common thread running through the eight VLCCs purchased by Chinese interests between 1 January 2021 and 23 February 2021, according to VesselsValue’s data, is that they all have a fifth special survey due.

Eneos Breeze (built 2003) was sold for US$22.8M and has a fifth special survey due in November 2021. Maran Castor was sold by Maran Tankers for US$22.0M and has a fifth special survey due at the end of March 2021. The 2002-built siblings Eagle Vermont and Eagle Virginia have fifth special surveys due in September 2022. The two VLCCs were sold en bloc in January for US$25M each.

Marion was sold for US$24.45M and has a fifth special survey due in June 2023. The intriguingly named Sino Macro was sold for US$20.5M and has a fifth special survey due in August 2022. Tsurumi (built 2003) and Zin Trader (built 2000) have fifth special surveys due September 2021 and July 2023, respectively.

This change in strategy is relatively recent and can be traced back to the purchase of the pair of Ridgebury Tankers in May 2020, although only a few 20-year-old VLCCs were purchased in 2020 – nothing like the volume of purchases seen at the start of 2021.

China’s huge demand for crude oil requires a stable tanker market. One possible explanation is that the sudden fall in the crude oil price and the doubling of tankers in storage in Q2 2020 revealed a weakness in the availability of large tankers available at reasonable rates to take advantage of downturns in the crude oil price.

One solution to the exposure to high rates for floating storage would be to assemble a fleet of elderly VLCCs to fulfil this purpose, but there could be other strategies in play.

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