As the glut of oversupply in the tanker market is overwheling and threatening to cut down the potential earnings of newbuilding vessels, ship owners seem to have accepted the notion of selling younger vessels (but still old compared to their modern counterparts) for scrap. According to the latest weekly report from CR Weber, until recently, the average age of tanker units sold for demolition was relatively level, despite the fact the the average age of the world’s tanker fleet is being brought down, as a result of newbuilding deliveries.
According to the report, “until 2010, most tanker demolitions sales were limited to single hull vessels. During 2010, there was some acceleration in the number of double hull vessels (many of which had been converted from single hulls), but this was in tandem to an overall acceleration in demolition sales as demolition values were rebounding from 2009 lows.
Accordingly, the percentage of double hull units sold for demolition relative to the total remained low during 2010 at 13%. During 1H11 the percentage rose to 22% and since the start of August it has risen further to 39%. It is also worth noting that since the start of September, the average age of demolition units has dropped to about 23 years with 5 units built in the early 1990s being sold for demolition (4 of these being double hull units). Although it is too early to surmise that this represents an emerging trend, it remains one of the most viable means of aiding the tanker sector from overcapacity.
Source: Balkans. 27 September 2011