Record number of supertankers ends up at scrapheap
On Monday The Wall Street Journal reported on a spectacular record: in 2018 a record number of mammoth tankers will end up at the scrapheap because recycling their metal brings in more than the transport of crude oil. In 2018 alone 50 oil tankers will be dismantled, (against 15 in 2017), good for a billion dollar or 850 million euro.
Too many supertankers on the sea
It’s for the third consecutive year that so many oil supertankers will be dismantled, most of the time in shipyards in and around India. Reason for it is that there are – probably 20% – too many similar ships on the seas, and the need for them is decreasing because of the restriction of the oil production by the Opec oil cartel. A second reason is that the United States import less oil, leading to the constant low prices for the transport of oil.
At the same time costs of transport are running up for the shipping companies, especially after the price increase the last two years. Transporting oil is not profitable anymore, on the contrary. The first three months of this year, Belgian Euronav, the world’s biggest oil shipping company, made a 39 million dollar loss.
One man’s loss is another man’s gain
The dismantling shipyards, however, are doing great business, and 2018 will be one of the best years ever, according to The Wall Street Journal. Besides, there’s a good chance the trend will continue for some years.
“One condition is that the price of scrap metal remains high and the tariffs for the transport of oil will stay under pressure”, says Euronav’s spokeswoman, Annik Dirckx. “The average scrap price is about 425 dollar per ton, in 2016 it was 300 dollar.
Question is whether the remaining mammoth tankers will disappear: even when 50 of them will be destroyed this year, Euronav expects some 49 others will arrive. Companies are still investing massively in new oil tankers because of the strict environmental and safety requirements.
Floating storage tanks
Euronav rather prefers a conservative write-down policy than sending their tankers to the scrapheap, knows Dirckx. “We will use our ships as long as possible, and if necessary, we will rent them as floating storage tanks.”