A large number of sales indicates a healthy sector, as those who bought low look to sell high. An absence of sales however usually means the market is flat, and there are very few sales to speak of right now
Despite glimmers of hope in the VLCC market - Clarkson’s reported VLCC freight rates were close to averaging US$11,000/day in September - there were only nine sales during September and October 2018.
There comprised two Greek sales; Astro Chorus was sold by Pantheon Tankers to Chinese buyers for a reported US$21.2M for conversion. The Greek operator has two newbuildings due for delivery in 2020.
Meanwhile, Greek owner Chandris also sold a 2002-built VLCC which had been part of the fleet from the day of launch. The 304,700 dwt Britanis was sold for an undisclosed price to Modec, which operates 19 FPSOs, which is what this vessel will likely end up as.
Three VLCCs were sold out of the German DS Tankers-managed fleet and as the company has no newbuildings on order or VLCCs due to join the fleet, this could indicate the company is slowly exiting the VLCC sector. The seven-year old DS Venture and DS Vision were sold to Minsheng Financial Leasing of China for US$56M in what is almost certainly a sale and leaseback deal and will remain under DS Tankers’ control.
The only outright sale was the 15-year old DS Vida which was sold to NGM Energy for further trading for USD21.8M. This leaves DS Tankers (the management arm of Dr Peters) with one 2000-built VLCC on its books. That vessel, DS Commodore, is currently valued at demolition by VesselsValue.
Greek players were far more active in the Suezmax sector during September and October 2018, with a hand in all seven sales. Avin International (Vardinoyiannis family) purchased the Teekay LNG, 2003-built African Spirit for a reported US$13M with Special Survey due (the cost of completing this could be around US$2M). This is the third Suezmax tanker Avin has bought this year.
Another Greek buyer was Polembros Shipping which bought two newbuilding resales from Central Mare (Evangelos Pistiolis) for a reported US$63M. The value of the original contract has not been reported, but VesselsValue indicates a level of around US$53M, which after financing costs represents a tidy profit for the Evangelos Pistiolis company.
Capital Product Partners (the public Marinakis family company) sold the 2001-built Amore Mio II for a reported US$11.5M to Fareast Ship Management for further trading. In 2007, this vessel was purchased by Capital Maritime and Trading (the private company of the Marinakis family) from Centrofin for US$89M. Six months later, under the name Amore Mio 2, the Suezmax tanker was sold to Capital Product Partners for US$95M, or US$594/dwt. Despite this very firm price, this was not in fact peak for Suezmax values, which reached US$695/dwt in June 2008. Since then values have tumbled; to put this into perspective, a 17-year old Suezmax like the Amore Mio II would have been worth around US$52M in 2007.
“C V Stealth was arrested in Venezuela in 2014, with the charterer accused of trying to lift a stolen national oil company cargo using forged documents”
Or approximately the same as the three nearly new Suezmax tankers snapped up at US$52M each by Zodiac Maritime (an Eyal Ofer family company) from banks looking to sell off the Toisa fleet.
This firesale also saw Zodiac Maritime pick up a nearly new Aframax tanker for US$40M. However, this was a sideshow to the eight Aframax tankers (pre-fixed “British”) sold by oil major BP Shipping. These are part of a series of 11 crude oil (12 tanks and pumproom) Aframax tankers built at Samsung to an ice class 1A design, featuring MAN B&W 7S60MCC7 15,820 kW propulsion. As such, they are reputed to have a higher fuel consumption compared to non-ice class counterparts, which seems to have dampened enthusiasm in the marketplace.
The eight tankers were sold in two tranches with Capital Trade and Transport (Marinakis – see above) taking three vessels en bloc at US$13.7M each. British tanker operator Union Maritime purchased the other five at a reported US$12.3M to US$13.3M each.
On the demolition side, five VLCCs were sold for recycling during September and October. The firmest price was realised by New Shipping (Adam Polembros) which achieved US$450/ldt. This VLCC had a stereotypical working life of 15 years with a Japanese shipping company before being sold to a Greek operator. In this case New Shipping purchased the VLCC for US$26.5M in March 2015, and enjoyed trading in an initially firm market before selling for scrap at US$16M.
Another VLCC sold for recycling was the Ramlah, which appears to have been under the control of the Saudi Arabian crude oil exporting shipping company Bahri since delivery in 1996. Ramlah was one of five Mitsubishi Heavy Industries 1990s built VLCCs in the Bahri fleet. Bahri ordered a raft of VLCCs in 2015 that are entering the fleet, rendering these 20+ year veterans redundant. At 48,100 ldt Ramlah is the largest vessel sold for scrap so far in 2018 and the four sister-ship candidates are likely to be assessed by surveyors at around the same ldt.
The only Suezmax sale for demolition of note in the two-month period was of the Teekay and Stena jointly owned Stena Spirit, a 2001-built Suezmax shuttle tanker. In its 2017 annual report, Teekay Shuttle Tanker LLC noted that the “carrying value of the Nordic Spirit and Stena Spirit shuttle tankers were written down to their estimated fair values, using appraised values.
“As notice of redelivery was received by the company in April 2018, the vessels are expected to redeliver from their charterer after completing their bareboat charter contracts in June 2018 and the company has adjusted its expectations for the vessels’ future opportunities. The write-down related to these vessels is US$28.5M, of which US$14.2M is included in a 50%-owned subsidiary of the company.”
Which means that although the scrap price for the sale of the Stena Spirit was not disclosed, it would seem that Teekay Shuttle Tanker LLC was not left out of pocket from the disposal.
Six Aframax tankers were sold for scrap in the two-month period, with the stand-out sale being that of the 2005-built C V Stealth. As well as being only 13-years old at the time of the sale, the reported price was only US$193/ldt. This was due to the circumstances surrounding the sale; it is reported that Stealth Maritime (Vafias family company) had chartered out the tanker to third parties to load a cargo in Venezuela. The vessel was arrested in Venezuela in 2014, with the charterer accused of trying to lift a stolen national oil company cargo using forged documents.
The vessel was idle for three years, during which time the ship suffered significant damage. Once released, now out of class and with a broken main engine, the renamed CV Stealth was towed to Trinidad and sold under “as is” terms. The case remains under litigation.