French orders to foreign shipyards

52
40,000
35,000
30,000
25,000
20,000
15,000
10,000
5,000
US$/day
In addition, 25-year old vessels must pass their fifth special
survey. With heavy investments required to get through
this delicate stage and a very exacting attitude adopted
by inspecting companies, it seems likely that the scrap
option will be increasingly adopted, especially since many
charterers will hesitate to engage poorly maintained vessels.
No fewer than 128 VLCCs will reach the age of 25 in
the next three years.
Charterers have been increasing their selective tonnage
policy. While several curious disparities exist in their
conclusions, this should continue to contribute to the
sidelining or elimination of the oldest units.
Finally, shipowners are beginning to react to oil company
consolidation efforts that have been developing:
• Although the fifteen largest shipowners in the world
currently control around 25% of the world fleet, proof
of the very large number of players in this area, efforts
to concentrate have risen over the past five years. The five
largest shipowners have augmented their fleets by 38%,
the next five by 15% and the next five by only 1%.
• On the business level, agreements already exist between
shipowners. For example, the US company OMI and
the Norwegian group Frontline control some thirty Suezmax
vessels.
• Negotiations are expanding in the VLCC sector and
multiple agreements of this type can be expected, despite
the tradition of individualism in the shipowning business.
The second-hand oil tanker market
The number of vessels changing hands in the second-hand
market for 1999 was - in terms of volume - entirely in
line with what market players experienced in 1998.
Aframax tanker freight rates
Average earnings
80,000 T UK/Continent
80,000 T East Med/West Med
0
Jan 98 Mar 98 May 98 Jul 98 Sep 98 Nov 98 Jan 99 Mar 99 May 99 Jul 99 Sep 99 Nov 99
Nonetheless, the year will remain in the minds of many
as one that seemed lacklustre and dull, ultimately providing
no genuine grounds for optimism concerning the year
to come. We have felt for a year now, and continue
to feel, that the value of second-hand oil tankers could
only increase if the price per barrel rose, if the supply/
demand ratio were to reverse itself in favour of supply and
if a minimum of confidence were to be restored. Of these
three conditions, only the price of oil rose, and this was
not due to heavy new demand but rather to limited supply.
The other two conditions remained unfulfilled, and in fact
the supply/demand ratio, an essential factor in our mind,
appeared to show a negative trend for shipowners.
• The VLCC second-hand market
At the end of November, only nine units had changed
hands compared to 17 vessels in 1998 and 20 in 1997.
This figure is deceptive because it includes among
others, one ULCC (alone and unique in its category, the
“Nissei Maru”, which was sold in August for approximately
$10.8 million), two small VLCCs of 240,000 dwt that were
refinanced on the Japanese market, and two vessels built
in the seventies acquired by Chevron from a leasing company.
Therefore, we’ll mention foremost the following sales:
• M/T “C. Bright”, 309,636 dwt, built in 1997, sold in the
first quarter for around $78 million and ten years of back
charter for $32,000/day,
• M/T “Kakuho”, 258,084 dwt, built in 1986, for $20.3
million,
• T/T “New Prosperity”, 271,967 dwt, built in 1981 for
an amount of roughly $7.5 million.
We must observe that the “C. Bright” sale was triggered
by German tax conditions, that the “Kakuho” was purchase
for a storage project in Vietnam and that “New Prosperity”
was on the market for a year before she was bought at a
substantial discount to the listed price. This underscores