Earnings for tankers without scrubbers fitted have been poor this year. File Image / Pixabay
Freight rates for VLCCs without scrubbers or the latest fuel-efficiency systems hit a record low in the first half of the year amid prolonged weakness in the tanker market.
Spot earnings for these VLCCs averaged just $500/day in the first half of 2021, shipbroker Gibsons said in a note to clients last week, the lowest level since the company began tracking them in 2000.
"Undoubtedly, the exceptional weakness in the VLCC market is almost entirely due to fundamentals," Gibsons said.
"According to Kpler, during the 1st half of the year total Middle East crude exports, which account for the lion's share of all VLCC trade, averaged 15.25 million b/d, down by a colossal 2.1 million b/d compared to 1H 2020 and even more if compared to 1H 2019.
"Meanwhile, 37 VLCCs have been delivered since July last year, while just 6 units have been scrapped."
The low earnings are also linked to a wider premium between HSFO used in scrubber-equipped ships and VLSFO used in those without. The premium in Singapore was $128.50/mt on Friday, according to Ship & Bunker prices, compared with $60/mt a year ago.