Half of the single-hull VLCCs are not trading.
About one-third of the remaining fleet of 75 single-hull very large crude carriers is classified as inactive, with utilisation rates at half the levels of newer and more modern tankers.
Ship-by-ship analysis by the Norwegian broker Lorentzen & Stemoco has found half the single-hulls were not trading ? either at anchor, in hot or cold lay-up or employed as storage facilities. ?Thus in practice, the single skinned VLCC fleet is already partially phased out as the physical removal of inactive vessels will have no impact on the market,? Lorentzen & Stemoco said in its weekly report.
As average time charter equivalent rates rose nearly $4,000 per day to over $33,000, focus has intensified on single-hull VLCC activity, with owners hoping many will be scrapped in 2010, better matching supply and demand and underpinning a rates recovery.
Lorentzen & Stemoco believes 25 single-hull tankers have in effect left the market, but that current demolition rates are too weak for a complete single skin phase-out by year-end, even though the scrapping pace should increase to six vessels per month. Eight have been sold for scrapping so far this year.
As a result Lorentzen & Stemoco forecast that the VLCC fleet, currently at 544, will grow by a further 18 units. There are 65 VLCCs scheduled for delivery in 2010 but the broker assumed 20% could be delayed or cancelled and not be delivered in time.
The findings on single-hull tankers have been underscored by fixtures reported this month: only four of the 24 VLCC spot fixtures have been for non-single hull tankers. All were loading in the Middle East Gulf and destined for the dwindling number of Asian countries that allow them enter to ports ahead of a regulatory phase-out.
Although the single-hull phase-out will play a role in tanker rates recovery, other factors are also being watched closely. February crude seaborne exports hit 32m barrels per day, according to Oil Tanker Intelligence Service ? the highest level since April 2009.
Brokers have also reported 92 VLCC spot cargoes fixed for March loadings, six higher than the same period last year, when Oil Tanker Intelligence Service reported 32.2m bpd of oil exported.
Of an estimated 16-18 VLCCs available for the remaining March loadings, a reported eight are single-hulls.
Another shipping researcher, Maritime Strategy International, said looming refinery maintenance schedules in Asia would reduce crude purchases from the Middle East in March and April. Low single-hull VLCC scrapping rates will drag on any market gains in following months, MSI said.
The London-based researcher also forecast average rates of $25,900 per day in May, 11% lower than February"s average, and half the January average of $49,300.
However improved rates this year have seen one-year daily timecharter rates for a modern 300,000 dwt VLCC now hit $37,400, $1,000 higher than January levels.