International dry bulk shipowners seem only to scrap
ships aged 18 years or older. While a couple of Chinese owners have scrapped
ships that were even younger than that. 19 ships out of 28 ships built in 1998
to 1999 and demolished between 2013 and 2015 highlights the effect of the
Chinese-flag scrapping cash subsidy provided to the Chinese owners.
China launched a two-year scrapping subsidy program in
2013, a program that was extended for two more years earlier in 2015. The
program may in nature be distortive and put in place to inspire an increase in
newbuilding orders, nevertheless the increased scrapping volumes is good for
the fundamental market balance.
Chief Shipping Analyst at BIMCO, Peter Sand, Says: “all
ship owners have dug into the pool of 1995 to 1997-built bulk carriers in
recent years, when choosing ships for scrapping.
Chinese ship owners in particular have scrapped even
younger ships, built in 1998-2000. They were encouraged to do so by a subsidy
program. With the extension of the program it’s likely more of the same will
show in 2016 and 2017”.
Uneven
distribution
During 1995 to 1997, new ships with a combined capacity
of 51.5 million DWT were delivered. In the past three years, 11.8 million DWT
of those ships have now been scrapped. This is equal to a share of 23%. Marking
a significant cut in fleets built in those years.
But, when compared to the breaking of ships built in the
80’s the cut has been much deeper. Two-thirds of the fleet built in those years
that were still on the water in 2012 have now been removed. The next two years
are likely to wipe out most of the remaining 80’s built ships, as the freight
market will hardly deliver significant returns.
Average
age of 25.3 years
Ships from 1969 to 2003 have been broken up in the last
three years and together brought the average age to 27 years by the time of scrapping.
The negative development of the market in the past couple of years becomes
clearer when looking at the average age of the individual years.
In 2013 is was 28.2 years, in 2014 it was 27.3 years and
in 2015 the average scrapping age has hit 25.3 years.
“The recent development in the scrapping age, is set to
continue in 2016.
Even though all older ships are not scrapping candidates
by default, they do ‘sit far out on the bench’ in most cases when the owner
decides which ship doesn’t make the cut anymore.
In a heavily oversupplied market as we see in these
years, scrapping remains the only permanent way to better the fundamental
balance. Idling and slow steaming, as effective as they may seem, are only
temporary measures not a part of a sustainable solution”, adds Peter Sand.
Source: maritime professional.
http://www.maritimeprofessional.com/news/younger-than-unless-282436
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