Thursday, January 16, 2014

Despite year end spike, miserable earnings for VLCCs in 2013

Ian Middleton
from  London
The spike in VLCC rates towards the end of 2013 did little to improve the outturn for this class of vessels for the year as a whole. Average earnings for VLCCs, according to Clarksons Research, averaged a miserable $16,009 a day for the year against $18,296 the year before.
Suezmaxes were similarly down though as it happens they are earning shedloads at the moment, while aframaxes were marginally up at low levels, but are currently in the money to the tune of $44,000 a day on average.
The one piece of good news was that VLCC demolition was the highest last year since the 2003 peak just before the double hull regulations came in. Some 22 VLCCs averaging 18.9 years went to scrap including a vessel of just 14 years, as opposed to 14 VLCCs the previous year.
Trouble is there has been a wave of new tanker orders in 2013 with 12% of the VLCC feet on order,10% of the suezmax fleet and 11.7% of the aframax fleet. This is not as bad as the 20% plus figures in the larger dry bulk fleet but is not good, and has lead commentators to forecast even greater levels of tanker scrapping this year.
Despite the dire year asset prices have held up reasonably well with a 6% increase in newbuild prices for VLCCs and 16% in 10-year-old tonnage according to McQuilling Partners, thanks to the late year rate surge, though five year old tonnage was off 4% on 2012. Suezmaxes did not fare quite so well with a drop off of 4%, with older tonnage suffering worse.
Meanwhile January has started with VLCC earnings dropping rapidly from December highs to average earnings of under $30,000 a day but suezmaxes continue to storm ahead with earnings of upwards of $70,000 a day. Aframaxes, though weakening a bit are still going strong at upwards of $40,000 a day.

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