The Asian and African markets are showing some signs of improvement but the oversupply problem is still obvious in both areas, Captain Mike Meade of M3 Marine said yesterday.
Captain Meade noted that while Clarkson’s OSV index has historically tended to follow the oil price, this has not been the case in recent years. “We’ve got a decoupling in this cycle, a decoupling we’ve never seen before,” he said.
And the explanation? “We’ve come apart because of huge oversupply. [There’s] too much steel and too much debt, and none of us saw shale oil coming.
Presenting on both markets at the 2019 Offshore Support Journal Conference, Captain Meade highlighted the numbers of OSVs in Asia and Africa that have been laid up for more than two months (defined as having had AIS turned off for eight weeks or more). Based on VesselsValue data, in Asia more than 400 vessels were in such a condition, while in Africa 229 were laid up, mostly in southwest Africa, the Gulf of Guinea and Angola.
He noted a rise in the number OSVs being scrapped, in spite of the relatively low steel content, with VesselsValue reporting 95 vessels as having been scrapped in 2018, while Fearnleys put the figure at 150.
“That’s starkly more than we’ve done in the past but it’s still a drop in the ocean when you look at fleet size,” he said.
Captain Meade also observed that younger and “quality” vessels are being scrapped, citing the example of Tidewater scrapping five PSVs dating from 1998-2001 and three 2005-2008-built AHTS vessels in March 2018.
The industry has redefined what constitutes an ‘old’ vessel, he said, citing Tidewater’s description of its post-Gulfmark consolidation fleet as comprising 102 “Tier 1” vessels, defined as being less than 10 years old, DP2 classed and with a BHP of more than 80 tonnes for AHTS vessels and a clear deck space of more than 700 m2 for PSVs. He added that less than 10% of OSVs awarded long-term contracts in 2018 were more than 15 years old.