VLCC spot earnings averaged just $500a day on the benchmark TD3C trade between the Middle East and China during the first half of the year on slow steaming, non scrubber, non eco basis, marking the lowest half yearly result this century according to tanker broker Gibson.

VLCCs have been the worst performer in the tanker sector, earning less than even handy/MR tankers on benchmark round voyage trades.

According to Kpler, during the first half of the year total Middle East crude exports, which account for the lion share of all VLCC trade, averaged 15.25m barrels per day, down by 2.1m barrels per day compared to H1 2020 and even more if compared to H1 2019. Meanwhile, 37 VLCCs have been delivered since July last year, while just six units have been scrapped although there have been a few more reported demolition sales of floating storage units. There has also been a notable decline in VLCC floating storage.

Apart from very weak fundamentals, Gibson has pointed out another factor at play, explaining why VLCC earnings on non- scrubber, non-eco basis have underperformed relative to other tanker sizes. The VLCC fleet has the highest uptake of exhaust gas cleaning technology. Nearly 39% of the existing fleet have scrubbers installed, while another 5% are still planning to retrofit. The technology is also expected to be installed on around 34% of the orderbook. The penetration of scrubbers is considerably smaller on other size groups.

Scrubber equipped vessels have been able to generate increasingly higher returns due to rising bunker prices. For scrubber equipped VLCC tonnage the earnings premium on TD3C nearly doubled from $4,000 a day to $7,000a day over the first six months, even though absolute freight/TCE levels were much higher in H1 2020 compared to H1 2021.