Those VLCC averages, from Clarkson Research, are slightly misleading because even the trademark Gulf/Japan and Korea routes are generating less than $9,000 a day. Voyaging west is a disaster as it has been for the whole of the year.
No relief is in sight. Nothing on the demand side appears to be about to change despite a modest revival in economic growth. On the supply side ships continue to be delivered and the orderbook remains threatening even if it is trimmed by slippage and cancellation.
It is true that the VLCC orderbook for the next three years is down to just under 10% of the existing fleet, with suezmaxes and aframaxes at similar levels, but in a bad market it only takes a handful of surplus ships to have a huge impact on rates. Some 17.5m dwt of VLCCs is due to deliver this year and 8.6m dwt of suezmaxes.
Scrapping is no panacea. It is true that some 2.6m dwt of VLCCs have been scrapped this year, almost the equivalent of VLCCs scrapped the whole of last year but still a minor amount compared to fleet growth. For some reason suezmax scrapping has been negligible this year.
What will be exercising the minds of investors in tanker companies is when are we going to come out of this, and the answer seems to be not for a while.
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