The number of supertankers sold for demolition may rise to the highest in six years after a plunge in charter rates left owners losing money on voyages.
The number of supertankers sold for demolition may rise to the highest in six years after a plunge in charter rates left owners losing money on voyages, the biggest cash buyer of obsolete ships said. Five supertankers, together capable of carrying enough oil to supply Japan for two days, were sold for scrapping this year, said Anil Sharma, chief executive officer of Cumberland, Maryland-based Global Marketing Systems Inc. This year's tally may be the highest since 2003, when 27 were scrapped, he said. "Suddenly, in the last two weeks, interest has come up," Sharma said by phone yesterday. "Owners are starting to look at recycling options."
Owners need faster demolition of old ships to lift rental rates that have dropped to a record low. Rates which rose as high as $148,000 a day in July last year have since slumped to a negative $1,363 as the Organization of Petroleum Exporting Countries curbs supply and economies contract.
Some owners may be prepared to ship cargoes at a loss, accepting a contribution to fuel costs, to get their vessels to more-profitable regions such as West Africa or the North Sea. Alternatives include mothballing the carriers, having them demolished or earning nothing.
The vessels need $11,603 a day to pay insurance, crew, repairs and other running costs, according to London-based Drewry Shipping Consultants Ltd. That suggests losses of about $12,900 a day for delivering cargoes, including the negative charter rates.
Global Marketing Systems buys obsolete ships for cash for sale to companies in India, Bangladesh and Pakistan that then demolish the vessels and sell the parts and steel. The company is the largest such buyer, according to Sharma.
OPEC, supplier of about 40 percent of the world's oil, cut output by 4 percent to 28.4 million barrels a day this year.
The number of in-service very large crude carriers, or VLCCs, advanced 5.6 percent to 527 ships this year.