BIMCO Friday released an analysis showing that dry bulk shippers in China are scrapping younger vessels, in a trend that is becoming more common globally amid the current shipping downturn.
Peter Sand, Chief Shipping Analyst at BIMCO noted that Chinese firms have recently been scrapping dry bulk vessels built between 1998 and 2000, while the rest of the dry bulk industry has favored older vessels built between 1995 and 1997 for scrapping.
BIMCO noted that the younger age for Chinese scrapping is likely due to government subsidies put in place in 2013 and extend two more years during 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," BIMCO noted.
It was further said that the global dry bulk industry is moving toward scrapping of progressively younger vessels, as the downturn in the sector wears on.
BIMCO's statistics showed that the average age of ships scrapped in 2013 was 28.2 years, while in 2014 this dropped to 27.3 years and in 2015 the average fell again to 25.3 years.
"The recent development in the scrapping age, is set to continue in 2016," said Sand.
BIMCO noted that over the past three years, 23 percent of dry bulk capacity built between 1995 and 1997 has been scrapped, amounting to 11.8 million DWT, with the group saying that "scrapping remains the only permanent way to better the fundamental balance" in the currently oversupplied market.
Earlier this month, Ship & Bunker reported on BIMCO research showing that lower newbuilding prices are failing to entice buyers in the dry bulk sector.
Source: ship and bunker. 23 December 2015