The spot market for VLCCs is around US$50,000/day and Suezmaxes are enjoying average rates of around US$40,000/day.
Secondhand trading values have strengthened. Brokers Lorentzen & Stemoco report that Frontline is believed to have bought the 297,000 dwt Jiangnan-built New Coral (2010) and the 297,000 dwt Jiangnan-built New Medal (2009) for an en bloc price of US$117.5 million. The 300,000 dwt Front Vanguard (1998) and the 311,000 dwt DS Chief (1999) are said to have sold for US$24.3 million and US$25.5 million respectively.
These positive developments need to be set against 9 per cent of the approximately 600-vessel global VLCC fleet being tied up for storage. Around 40 of these vessels are lying off Singapore fully laden with crude. Typically these vessels will be on 2–4 month contracts, meaning a spike in the oil price could see a wave of oil re-enter the market.
With the number of newbuilding vessels entering the market in 2017 set to eclipse the number on order, there is an emerging risk of a return to overcapacity. Newbuilding prices are low: in China some business is being booked at just under US$90million.
Vessel scrapping is at low levels, although prices are now creeping past the US$300 per ldt mark. This could persuade some owners to trade in VLCCs, Suezmaxes and uncoated Aframaxes.
Source: Tanker Shipping
