Markets - VLCC recycling continues

May 18 2018

Following the official reopening of the Pakistani market for tankers, the offloading of the plethora of unsold tanker/VLCC tonnage continued at pace last week, as interested Pakistani Buyers eagerly filled their plots.

There were further VLCC sales concluded, gradually bringing the total number of units sold through 2018 towards the 30 mark, a figure which looks likely to be reached before the end of May - not even halfway through the year - GMS said in its weekly report.

There is a noteworthy dissimilarity in pricing a VLCC versus MR/Aframax/Suezmax types, as very few end buyers in the Indian sub-continent are capable of opening such large US dollar value Letters of Credit (LC).

Under the current market conditions, this can easily amount to an around $18 mill LC on roughly 40,000 ldt unit, GMS said.

Given the limited number of capable end buyers who are able to do this (translating into a lower demand), VLCCs are discounted far more than the average tanker for which, a greater number of buyers are open/available to negotiate.

Moreover, VLCCs usually take between six to eight months to fully recycle, resulting in a significant exposure for the respective buyer who will likely endure multiple market peaks & troughs over this period. Only a recycler with a strong financial standing is generally willing/able to withstand these fluctuations.

Pakistan and Bangladesh - both of which have reached saturation point - tend to be the main buyers for large ldt tonnage, while Indian recyclers prefer smaller vessels that can be quickly dismantled, thus minimising there market exposure, due to the generally volatile nature of steel plate prices and currency fluctuations.

Finally, those owners who opt to sell their large ldt ships into India for Hong Kong Convention green recycling, such as Ridgebury Tankers last week, there is normally a large discount to contend with, compared to conventional recycling, GMS said.

The sale of the 1999-built VLCC ‘Ridgebury Pioneer’ for a reported $408 per ldt on the basis of ‘as is’ Khor Fakkan, gas free and with 300 tonnes of bunkers ROB was said to have been concluded at a $500,000 discount.

Other deals reported by brokers included the 2000-built VLCC ‘Greek Warrior’ sold to undisclosed interests for $430 per ldt, ‘as is’ Singapore, gas free for man entry and with 480 tonnes of bunkers ROB and the 2001-built VLCC ‘Silver Glory’ for $436.5 per ldt with delivery Indian sub/cont.

The 1997-built Aframax ‘Oil Runner’ was said to be sold to undisclosed interests for $470 per ldt, ‘as is’ Khor Fakkan with 70 tonnes of bunkers ROB and with various equipment, including two propellers.

In addition, the 1999-built LR1 ‘Amazon Guardian’ was reported committed for $455 per ldt to Pakistan recyclers, ‘as is’ Khor Fakkan, gas free for hot works and with 400 tonnes of bunkers ROB.

Finally, the 1991-built MR ‘Divine Mercy’ was reported sold to Pakistan interests for an undisclosed price.

GMS has supported the publication of a booklet entitled - ‘The Recycling of Ships’  - written by consultant Nikos Mikelis.

It contains a list of the world’s recycling facilities and chapters on the economic drivers behind the decision to recycle, sale & purchase with end-of-life ships, the Hong Kong Convention, EU Ship Recycling Regulation and standard improvements within the ship recycling industry.

The booklet is available to download as a pdf at


Previous: Markets - Softening rates scenario returns

Next: Palau registry appoints TMG as deputy registrar

Jun-Jul 2024

Tanker Operator Athens report: managing crewing, training challenges, views on SIRE 2.0