GMS, the world’s largest cash buyer of ships for scrapping, which has its Middle East office located in Dubai, has indicated that 2015 will likely be a record year for ship scrapping.
GMS’s founder and CEO, Dr Anil Sharma, told Maritime CEO that 2015 is on track to surpass 2012 in terms of the number of ships scrapped and total tonnage recycled.
The charge has been led by capesizes. Some 65 capesizes have gone to scrap so far this year, with Pakistan the biggest beneficiary of this bulk clearout, says Sharma.
GMS expects that more than 100 merchant vessels will be scrapped this year, which is expected to put downward pressure on steel prices, cutting into ship breakers’ profits.
Sharma says profitability for recyclers remains problematic due to fluctuations in currencies and commodity prices. The price of finished steel in ship breaking hubs such as South Asia has been impacted by cheap imported finished steel.
In less than a year, scrap prices have dropped by more than 25%, says Sharma, describing the falling commodity prices as “frightening”.
Source: Arabian supply chain. 28 June 2015