Tanker earnings hit scrapping business

Dec 19, 1996 01:00 AM

Steady freight earnings in the tanker sector have dramatically reduced the number of ships scrapped in the first 11 months of this year. At the end of November, 62 vessels aggregating 7.49 mm dwt had been removed from the world tanker fleet since the beginning of the year. Of these vessels, 52 ships (5.66 mm dwt) have arrived at a demolition site for breaking, with the remaining 10 ships (1.84 mm dwt) being converted into Floating Production, Storage and Offloading (FPSO) vessels. A further 18 tankers have been reported sold for scrap. Assuming all of these vessels arrive for breaking before the end of this year, the estimate for the full year will be below the level of 1995 when 83 ships (10.75 mm dwt) were deleted. The biggest difference is in the very large crude carrier category, where 16 ships have been deleted and a further four have been sold for scrap. In 1994 and 1995 the number of VLCCs removed was 35 and 31 respectively. The handysize (20,000 dwt to 39,999 dwt) size has seen 23 ships scrapped and a further 10 sold. Geographically, India received the largest number of tankers for breaking (33) while Pakistan and Bangladesh took 10 and 9 ships respectively. Among the 10 vessels being converted to FPSOs, four are VLCCs, three of which are owned by Brazil's state-owned Petrobras. Quality issues could be the source of an increased level of scrapping in 1997. Badly-maintained ships could be forced out of the market by regulatory authorities, port state control and charterers' refusal to accept them. Demand for FPSOs in the North Sea, Brazil, the Far East and West Africa could also see more tankers being removed from the fleet during 1997.

Source: not available
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