Volume 2, issue #4 - 11-02-1997

Jan. 30, 1997 Last week saw a healthy start to the scrap market for 1997 with the sale of the World Tankers-controlled 1970-built very large crude carrier Supernal (220,949 dwt). The sale, by Polys Haji-Iannou's Singapore company, represents the first sale of a VLCC for scrap this year. A high reported price of $ 172 per light displacement tonne was reported for the vessel, which has gone to Vietnamese buyers. And the high price is accounted for by Vietnamese breakers requiring tonnage to be delivered with a hot work, gas-free certificate. Meanwhile, Mobil has put the 1974-built suezmax tanker Aladdin (140,803 dwt) for sale on the scrap market, which is expected to attract a lot of interest. Offers were valid until January 24. And Norway's dry bulk, tanker and gas carrier giant Bergesen has placed the 1972-built ore carrier Larina (178,750 dwt) on the market for scrap. A special survey is due this year. Bergesen is likely to look for a high quality buyer and possibly accept a lower price as a result. The vessel is likely to be in good condition and will probably attract offers at around $145 per ldt, according to demolition brokers. This is less than can be achieved by tankers, as breakers do not favour ore carriers because their ballast tanks tend to have a high degree of corrosion. However, brokers said the Larina was likely to be in good condition, and that could be reflected in whatever price the vessel achieves. Brokers said it would be a significant sale when it happens as Bergesen had clearly decided not to let it trade beyond 25 years. Market sources said this could be a clear indication of its policy for ships approaching the 25- year mark. Larina was originally built as a combination ore/oil carrier and converted to dry trading only in 1983. Bergesen has been the only owner and the vessel has been employed on contracts of affreightment for most of her life. Larina is due in Rotterdam next month, where inspections should be possible. The vessel would not make the Indian subcontinent until March. If it is to go to Indian breakers, a deal would have to be concluded before the country's budget in March, brokers said. The owner could seek a cargo to take out towards the Indian subcontinent to save on an expensive ballast voyage. Tanker owners are hoping that VLCC scrap sales will pick up this year, having been disappointing in 1996. Last year saw 14 vessels sold for scrap, totalling 3.79 mm dwt, according to Fearnleys in Oslo, compared with 30 vessels (7.62 mm dwt) in 1995. VLCC owners have been dissuaded from scrapping their ships in the last few months, influenced by reasonable freight returns which are now rising, and the collapse in scrap prices. Brokers suggested the Supernal could have achieved a much higher price, possibly up to $192 per ldt, had the principal agreed to sell when the ship was first put on the market some two months ago. There has, however, been the disappointment of the failure of the sale of the 1973-built New Brooklyn (229,727 dwt, 34, 800 ldt), negotiated on December 30, and she is now back on the market for scrap. The failed sale was negotiated at a reportedly firm price of $182 per ldt. Initially the sale was reported to have been through brokers direct to a Bangladesh buyer, but subsequent reports suggested it had involved a cash intermediary. Other reported scrap sales include the reported sale of the 1970-built panamax Bontrader (59,662 dwt, 10,000 ldt approx.), controlled by Cosco. Brokers reported a price of $155 per ldt, basis delivery Chittagong. The 1973-built handysize dry bulker, Leros Spirit (27,469 dwt, 7,190 ldt) is also reported to have been sold for scrap at a price of $155 per ldt to cash buyers, basis delivery India. On the trading front Malaysia's Perbadanam Nasional Shipping Line (PNSL) has placed the 1982-built aframax tanker Pernas Duyong (82,253 dwt) on the market. The vessel is likely to attract strong interest because of the dearth of good quality aframax tonnage coming on to the market. Robust freight earnings which have shown consistent returns for severalmonths make this type of tonnage particularly attractive to obtain. Brokers said this could be a clear indication that PNSL has more faith in the likely strength of the dry bulk carrier market as opposed to tankers. Norway's Tschudi & Eitzen is reported to be behind the purchase of the 1981- built panamax dry bulk carrier Titus (62,180 dwt). The vessel is currently timechartered until the end of April at a low rate of $6,500 per day. T&E has yet to decide whether to trade the vessel spot or seek long-term employment, and it has not ruled out other dry bulk purchases. Norwegian owners generally are said to be very interested in buying dry bulk tonnage, but brokers say the level of inspections has reduced in the last week, meaning the sale and purchase market for further trading could be in for a quiet phase. Brokers report that the 1982-built products/chemical carriers Jo Breid and Jo Elm (26,300 dwt) respectively remained unsold and that owners were holding out for a higher price of $ 16 mm each. Last week brokers widely reported the vessels had been sold for $ 14 mm each.