VLCC rates at 11-year lows, scrap now says Frontline

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Singapore: With VLCC rates at their lowest in at least 11 years owners will scrap ships and cancel orders for new ones, according to Frontline Ltd., the world’s largest VLCC operator. VLCCs are making $4,335 a day after fuel costs for delivering Middle East crude to Asia and the U.S., according to data from the London-based Baltic Exchange. Hamilton, Bermuda- based Frontline said February 26 it needs $12,000 to cover costs such as repairs, crew, insurance and lubricants for engines. Interest on loans takes the figure to $32,100. “We will see scrapping happening soon, then we will see massive cancellations in the order book,” Singapore-based Jens Martin Jensen, temporary chief executive officer of Frontline’s management unit, told Bloomberg. “I don’t think this market is going to last until 2011.”
Shipyards in South Korea, China and Japan have all but two of the 146 orders for very large crude carriers, according to Lloyd’s Register-Fairplay data on Bloomberg. Daewoo Shipbuilding & Marine Engineering Co., based in Seoul, has the most, with 26 orders, the data show. Hyundai Heavy Industries Co., the world’s largest shipbuilder by market value, has orders for 16.  [16/04/09]