Ship recycling continues to grow:

Ship recycling is continuing to grow at a fast pace as the worldwide shipping industry struggles against some of the toughest times it has ever faced.

The current amount of capsize tonnage on order for 2011 has been put at around 103.2m deadweight and it is estimated that in excess of 25m dwt for scrapping will have ended up on the beaches of India, Bangladesh and Pakistan by the end of this year.

This is one measure of the rate of scrapping contained in a comprehensive review of ship recycling in the Indian subcontinent and beyond which appears in the current issue of Currents, the magazine published twice a year by the American P & I Club.

Shashank Agrawal, legal advisor at Wirana Shipping Corporation in Singapore, describes the escalation in ship recycling, saying his company has negotiated more than 1,700 vessels and delivered a total deadweight in excess of 48m, with the list continuing to grow every day.

Wirana purchases vessels on the basis of 100% cash and then sells them to a recycler in any one of the ship recycling countries. For vessels purchased ‘as is’ the cash buyer takes over the ship at the delivery port and then boards its own crew to sail the vessel. Meanwhile, the vessel is reflagged, given a new name and provided with fresh insurance cover for the voyage to the recycling yard.

Mr Agrawal states: “Therefore, Wirana is rightly referred to as an underwriter of recycling market risks. Due to fluctuations in steel prices in an extremely volatile market, the owners/sellers could stand to lose millions of dollars by the time the vessel arrives at the delivery port. Irrespective of market conditions, the principles of Wirana have steadfastly stood by owners and sellers.”

The author also describes in detail the legal situation as it affects ship recycling in India, Bangladesh and Pakistan, the recycling capacities in these countries and the state of ISO certifications in them.

The second part of this detailed survey of ship recycling will appear in the spring 2012 edition of Currents.

Source: ship management international. 14 December 2011

http://www.shipmanagementinternational.com/2011/12/ship-recycling-continues-to-grow/

Scrapping of older vessels to intensify in coming months, says Braemar Seascope:

So far this year, demolition of older vessels has been feverish, in an attempt by ship owners to help alleviate the tonnage oversupply pressures that the global shipping market has been dealing with, in almost every shipping trade, from dry bulk to tanker.

According to Rodney North, Braemar Seascope Director in Demolition, the level of scrapping activity in the dry bulk segment so far this year, is 400% more than in 2010, while in the tanker sector levels are approximately 25% lower than in the previous year.

But, as Mr North says in an interview with Hellenic Shipping News Worldwide, the size of the orderbook and the number of vessels delivered from shipyards around the world has been such, that the rate of scrapping has done little to diminish the global fleet, thus applying pressure to freight rates. As he says, scrapping activity must continue to remain high and increase in the coming months and years, in order for the shipping industry to recover and return to a healthier balance between demand and supply.

How has the demolition activity been progressing so far this year both in the tanker and dry bulk segments?

• Bulker - 23.6m dwt sold for demo in 2011, 400% higher than in 2010 at same point. 
• Tanker - 8.25m dwt sold for demo in 2011,  25% lower than in 2010 at same point.

In 2011 the demolition market has been dominated by sales of dry bulk vessels with a notable number of larger lightweight vessels i.e. panamax and capesize vessels being sold for scrap.

For the most part activity relating to tanker scrapping has been subdued compared to the number of dry vessels being sold for demolition. This is partly because the vast majority of single hull tankers have already been phased out.

Over the last few months we have seen a greater supply of overaged double hull tankers coming onto the market, especially late 80s and early 90s built MR and Aframax tonnage, although this trend is likely to spread to all tanker tonnage.

Overall this year has seen prices rise steadily with small peaks and troughs for both wet and dry tonnage respectively, with levels well in excess of US$500/Ldt being maintained throughout the majority of the year.

Tanker demolition has been somewhat more complicated this year with new regulations being imposed in Bangladesh whereby all tankers have to be gas free for man entry and hot works (the same as in India). Pakistan has been the main beneficiary of this new regulation with many owners unwilling to undertake gas free cleaning for hot works at their expense prior to arriving at the final breaking port. Many of the cash buyers have been left having to purchase vessels on an ‘as is’ basis, cleaning the vessel at their cost and expense before undertaking the final voyage to India or Bangladesh to satisfy the needs of the buyers there. The vessels that are gas free for man entry and hot works have seen a premium in terms of the prices being offered this year.

Do you think these levels of activity are enough to help alleviate oversupply pressures in both markets?

No. According to our Research Department this year will see a net bulk carrier fleet growth of 10% compared to a 6% demand growth, while the figures for tankers are at 6% and 2% respectively.

As it stands given the current number of newbuilding deliveries and those projected for the next two years, even with large number of vessels being scrapped the global fleet is still set to grow. Supply is still exceeding demand and this will continue unless we see a significant increase in the amount of vessels being scrapped or we see a marked increase in newbuilding cancellations.  The question also remains as to whether the demolition market can sustain increasing numbers of scrap vessels, and the possibility of oversupply of scrap tonnage leading to a fall in prices.

Do you expect that pressure from a tonnage supply point of view will improve next year?

No.  As far as bulk carriers are concerned we anticipate a net fleet growth of 8%-10% as against a steady demand increase of 6%

In terms of scrap prices offered, would you say that they are attractive to ship owners or not?

Yes.  For example if selling today, owners could expect to realise US$16million to $18m for a single hull VLCC and US$21m-$22m for a first generation double hull VLCC (the latter having a higher lightweight and therefore higher price). Considering this against the background of owners facing negative spot market earnings on the major trading routes, it is clear there is pressure on potential sellers to seriously consider taking advantage of the current strong demolition levels. Owners purchasing older tonnage are naturally using the current demolition value of the vessel as the starting point in terms of valuing the vessel.

This year has seen historically very strong demolition prices, with prices now around US$500/Ldt being offered for all tonnage types for delivery on the Indian subcontinent.  Combined with falling second hand values and depressed freight rates, demolition values should be considered attractive for Owners with potential scrapping candidates.

How has the situation regarding the ban of demolition activity in Bangladesh been affecting the market so far?

Over the past year Bangladesh has seen numerous closures and resumptions in shipbreaking activity relating to moves by the High Court and the Bangladesh Environmental Lawyers Association relative to the implementation of improved health and safety procedures and recycling regulations. Overall the impact on prices has not been negative, with Pakistan and India remaining aggressive even in the periods of Bangladesh’s absence. The main effect of the various openings and closures of the Bangladesh Shipbreaking market has been to create volatility with cash buyers and breakers speculating on price against anticipated demand fluctuations. In the past when Bangladesh has been unable to purchase vessels for long periods, we have seen China absorb some tonnage finishing in the Far East, as Bangladesh was removed from the competition,  and India being that much further to ballast to with high bunker prices. However, more recently the very firm prices available from India and, to a lesser extent Pakistan, have negated the influence of Bangladesh’s absence with China simply being unable to compete on the larger lightweight vessels.

Do you think that demolition activity will be more intense in the months to come?

In short YES. With the outlook for global trade growth recently worsening and supply still far surpassing demand, it would seem inevitable that as more and more vessels fail to make a profit or even break even, owners could be left facing the alternatives of cold lay-up or demolition.

Source: Hellenic Shipping News Worldwide. By Nikos Roussanoglou. 7 November 2011

http://hellenicshippingnews.com/index.php?option=com_content&view=article&id=56459:scrapping-of-older-vessels-to-intensify-in-coming-months-says-braemar-seascope-&catid=1&Itemid=61

The huge amount of tonnage leaving the fleet for recycling is very positive news for the dry bulk market-Sand

In absolute numbers, 2011 is going to be the new Number 1 in terms of the greatest amount ever of dry bulk tonnage leaving the fleet to be recycled. We are on course for more than 20 million DWT to be demolished, with the potential of reaching 25 million if owners continue to be attracted by the relatively high demolition rates and freight rates fail to improve significantly through the remainder of the year.

Chief Shipping analyst at BIMCO, Peter Sand, says: “The huge amount of tonnage leaving the fleet for recycling is very positive news for the dry bulk market.  As 2011 is going to provide the largest inflow of new ships ever, this counterbalancing effort by ship owners is softening the current imbalance between supply and demand as fleet growth will be tempered”.

The previous demolition record was set in 1986 when 12.9 million DWT was demolished. At that time the dry bulk fleet was comprised of just 197.2 million DWT, bringing the annual demolition rate to 6.5%. Should 2011 bring around the same annual demolition rate relatively, 35 million DWT would have to be recycled.

The primary driver behind this development is the fact that earnings have been close to OPEX-levels for most of the year. Combined with a strong inflow of new tonnage this has led to a strong surge in demolitions of older tonnage.

Impacting Capesize fleet growth

The fleet growth rate in the Capesize segment has so far been tempered by 4.4% due to demolition, with the potential of reaching as much as 6.6% for the full year. This offsets the fleet growth to a large extent, since the absence of any demolition activity during 2011 would have resulted in the Capesize fleet growing by astonishing 20%. Massive as this figure may sound, the Capesize fleet grew by 23% last year and 18.5% in 2009.

If the full potential of demolition of the Capesize fleet in 2011 should materialise, that would equal another 4.6 million DWT to be demolished. In order words it would require the 28 remaining Capesize vessels that are built in 1985 or before to exit the fleet.

The demolition activity has primarily involved Capesize vessels. 55% of the recycled DWT in 2011 represented Capesize vessels. This compares to the previous 10 years average at just 27% of total dry bulk demolition. As the Capesize segment has already seen inflow of new tonnage in excess of 27 million DWT (153 vessels), the decision to take a vessel out of the commercial service is helping to cushion the impact from significant oversupply which has already left deep scars in  terms of very poor earnings. Average spot earnings for a 10 years old Capesize vessel in 2011 have been just USD 8,296 per day. This is the poorest result on record. Last year such a vessel earned USD 30,587 per day on average.

This means that, if you have so far  traded your Capesize vessel exclusively in the spot market during 2011, earnings would have covered only daily running costs, regardless of the composition of your Capesize fleet (new/old, debt-free/indebted). This may be one of the most important factors behind the booming demolition activity as massive inflow of new tonnage doesn’t encourage higher demolition activity alone.

Daily running cost on a Capesize vessel today is around USD 8,000 per day excluding capital costs and depreciations. If you include the above-mentioned costs in the earnings equation the picture looks quite different and it really spells out the challenges facing owners. If your new built and externally financed Capesize is bought at top dollar at the peak of the market (USD 95 million) using 80% debt at 5% p.a. you will need just above USD 30,000 per day to break-even with the vessel on a standalone basis. At the other end of the scale the same calculation equals a break-even rate at USD 19,000 per day if you invest in a 5 year old second hand vessel today at USD 39 million.

A high price and a strong flow

Owners of V Europe have just sold the vessel for USD 10 million to be demolished at a Bangladeshi facility. The vessel that was beached on August 30 is amongst the latest in a very steady stream of dry bulkers to be withdrawn from service. The 1982-built, 139,496 DWT vessel is the 58th in the line of Capesize bulk carriers, underscoring the strong flow of vessels satisfying a very solid demand for scrap metal in the demolition country.

The healthy demand for scrap steel is visible from the high ldt-prices offered. V Europe went to the breakers for USD 525 per ldt (Light Displacement Tonnage), building further on the continual rise in prices offered by cash buyers.

There are four major ship recycling markets, namely India, Bangladesh, China and Pakistan. In all terms, India is by far the largest ship breaking nation and Alang the leading facility. So far this year, 283 vessels with a cargo capacity of 8.9 million DWT have been scrapped by Indian breakers. Bangladesh comes in second in terms of DWT - 7.4 million and China in terms of numbers – 107 vessels of various kinds.

The typical demolished Capesize vessel is 27 years old on average with a cargo capacity of 160,125 DWT and built in Japan (51%) between 1977 and 1991.

“At the current demolition pace, 4.7% of the dry bulk fleet will be demolished during 2011.  But as the order book still holds 235 million DWT in prospect for future delivery equal to 40% of current active fleet, recycling of over-aged tonnage must remain at high volume to bring optimism back and steer this dry bulk segment  towards more sustainable freight levels – and thus better earnings", adds Peter Sand.

Source: Balkans (Sourced from BIMCO). 26 September 2011

http://www.balkans.com/open-news.php?uniquenumber=120777

Placing Our Dry-Bulk Shipping Universe Under Review:

We have decided to place our fair value estimates for our dry-bulk shipping coverage universe under review as a result of weaker-than-expected freight rates throughout the second quarter and our expectations that market fundamentals will remain soft for an extended period. We think cash flow generation will eventually come under pressure for each of these companies due to the various levels of exposure to the weakened dry-bulk market. As such, we expect material fair value changes to Excel Maritime EXM, Genco GNK, and Eagle Bulk EGLE due to their significant fleet exposure to the spot market. Although we still believe Diana Shipping DSX and Navios NM are well-positioned for prolonged weakness in shipping, we expect these two will also suffer, as EBITDA is eroded through upcoming contract expirations with charterers. Our long-term expectations generally remain positive, but we caution these firms' near-term profitability headwinds may pose increased risks to their ability to service their obligation schedules.

On Wednesday, Genco reported 2nd quarter results that came in slightly below our expectations, and we project downward revisions to our long-term freight rate assumptions for all asset classes, including Capesizes and Panamaxes, as we expect market fundamentals to remain weak for an extended period. For the three-month period ended June 30, 2011, the company posted voyage revenues of $88.6 million (excluding Baltic Trading), down 9.9% compared to the year prior, and consolidated operating margins of 32%, down from 52% in the second quarter of 2010. Net income attributable to Genco declined to $10.1 million, down 73% from the same period prior, resulting in diluted EPS of $0.29. Although consolidated revenue ($98.5 million) declined year-over-year and operating costs increased sequentially from managing a larger fleet, we're encouraged to see the firm remain cash flow positive and bolster its cash balance to $292.1 million (excluding Baltic Trading) over the second quarter. Additionally, the company took delivery of 2 new vessels over the period, leaving one final newbuild scheduled for delivery with minimal capex requirements.

During the conference call, we like the fact that management reiterated its focus on deleveraging the firm for the remainder of 2011. With the company's upcoming debt amortization schedule at about $19 million per quarter until June 2012, we think the firm's increased cash position calms any concern about potential liquidity constraints over the next several periods. Management also provided their outlook on industry fundamentals and sees a potential pickup in Japanese reconstruction to be a short-term catalyst to demand. Chinese steel production increased 9.2% year over year through the first half of 2011, and the China Iron & Steel Association raised its 2011 crude steel output to 700 million tons from their previous forecast of 660. We think China continues to be the key driver to iron ore and coal activity over the long run, with steady increases to steaming coal imports used for power generation in the emerging economy.

With regards to supply, we think slippages will continue to remain elevated (about 40% in the quarter) as ship owners face financing issues to take delivery of previously ordered vessels.

We think scrapping activity in the second half of 2011 will resemble that of the first half, due to low charter rates and high scrap steel prices extending into 2012.

Management noted that 13.5 million deadweight tons have been scrapped so far in 2011, compared to 5.7 million in all of 2010, and estimates that up to 100 Capesize vessels will be scrapped by the end of the year.

Still, we think overcapacity will continue to weigh heavily on freight rates for some time, and Genco expects it will take 12-18 months for a material recovery.

Source: Toronto Star. By Paul Choi. 27 July 2011

http://torontostar.morningstar.ca/globalhome/industry/news.asp?articleid=389064

Panamax Scrapping on the Rise:

Following capsize bulk carriers, old panamax bulker scraping is also on the rise and expected to record new high.

At the beginning of 2011, panamax bulk carrier kept relatively stable market conditions compared with capsizes. However, recently the sector fell into market downturn and scrapping volume already hit 50 vessels till now, almost the same with the highest of 53 set of 2009.

The scrapping level till now is expected to alleviate the current overcapacity brought by excessive new orders.

It is predicted that over 100 panamax bulker would be scrapped this year, an all-time new high.

Source: E Ship Trading. 28 July 2011

http://en.eshiptrading.com/news/d/222/572/

Scrapping Record Fails to End ‘Nightmare’ for Shipowners: Freight Markets

Shipowners are scrapping capesize vessels at a record pace after rates plunged about 50% n a year. It’s still not enough to end losses.

48 capesizes, usually used for hauling iron ore or coal, have been demolished this year through June 24, compared with 18 in the whole of last year, according to shipbroker Clarkson Plc. Rates will remain below about $11,000 a day for the rest of the year, compared with a breakeven point of about $23,000, according to Johnson Leung, head of regional transport at Jefferies Group Inc. in Hong Kong.

The surge in scrapping has failed to revive capesize rates because 117 new vessels have been launched this year as yards work through orders placed in anticipation of a surge in iron ore and coal shipments to China. Instead, China is paring commodity imports to help cool growth, while Vale SA (VALE), the world’s largest iron-ore miner, is adding vessels larger than capesizes to cut its reliance on the charter market.

“The capesize sector is just a nightmare for shipowners,” said Shin Ji Yoon, an analyst at KTB Investment & Securities Co. in Seoul. “Lines went on a buying frenzy and business just hasn’t panned out as they hoped.”

The capesize fleet may rise to about 1,300 by year-end from 1,218 as of May, according to Osuke Itazaki, an analyst at SMBC Nikko Securities Inc. in Tokyo. That follows a net increase of 195 vessels in 2010 and 103 a year earlier, he said. Capesizes carry about 170,000 tons of cargo on average.

Plunging Rates:

The growing supply of ships has pushed capesize rates to about $6,405 a day on the spot market compared with an average of $30,587 for the whole of last year, according to London-based Clarkson, the world’s biggest shipbroker. Its Baltic Capesize 4TC Index was at 12,898 yesterday compared with 24,237 a year earlier.

Forward-freight agreements, traded by brokers and used to bet on or hedge future transportation costs, anticipate rates no higher than $18,230 a day through 2016, Baltic Exchange data show.

“The bulk market will probably be bearish for as long as five years because of the overcapacity issue,” said Um Kyung A, an analyst at Shinyoung Securities Co. in Seoul. “Shipping lines have been quite reckless in ordering new vessels in the last three years.”

Jefferies Group’s Leung said he expects about 80 capesizes to be scrapped this year. Shipbroker Lorentzen & Stemoco AS predicted as many as 100 earlier this month. That compares with a record 25 in 1998, according to Clarkson data.

Mitsui, Grand China:

As of June 1, 570 new capesizes were on order, according to the shipbroker. The vessels accounted for 45 percent of the 249.3 million tons of bulk ships on order. Mitsui O.S.K. Lines Ltd. had the biggest backlog with 30, followed by 22 for Grand China Logistics, according to Clarkson.

Mitsui expects daily rates for capesizes to average $15,000 in the six months ended September and $25,000 in the following six months, according to a statement last month. The Tokyo-based shipping line had 109 capesizes as of March.

The company has no intentions of changing its fleet plans, said Kazumi Nakamura, a spokeswoman. Calls to Grand China, which is backed by the investment arm of China’s Hainan province, went unanswered yesterday.

Orders for dry-bulk vessels jumped from 2007 through the first half of 2009 alongside a surge in freight rates. The Baltic Dry Index, a benchmark for commodity-shipping costs, hit a record 11,793 in May 2008, after rising fourfold in two years.

The index has since tumbled 88 percent, partly because of a 22 percent increase in the size of the global bulk fleet in the past three years.

China Commodities:

Demand has also slowed as China, the biggest customer for bulk-shipping lines, curtails commodity purchases from Brazil and Australia because of rising prices and concerns about its economy overheating. Imports of coal and iron ore rose 2.8 percent this year, compared with a 21 percent increase last year and a 30 percent jump in 2009.

“Overseas iron-ore prices are still very expensive,” Leung said. “That’s why domestic iron-ore production in China is picking up.”

Rio de Janeiro-based Vale has also hurt charter rates as it begins to take delivery of 19 Chinamax ships, which are almost as big as the Bank of America Tower in New York and can haul twice as much cargo as a capesize. The miner is adding the vessels as it seeks greater control over shipping costs, particularly on routes to China, its biggest customer.

“Vale wanting to do its own thing has certainly contributed to the plunge in the spot market for capesize ships,” Shinyoung’s Um said.

Metals Prices:

Alongside the decline in rates, rising metals prices are boosting the appeal of scrapping because shipowners can get higher prices. Some capsize owners were able to get as much as $10 million selling ships for scrap this year, an amount it would take three years to earn in the current charter market, according to Braemar Shipping Services Plc.

Shipowners have scrapped capesizes as new as 15 years old because of the rates plunge, compared with traditional ages of about 25 years or more, said Nitinbhai Kanakia, joint secretary of the Ship Recycling Industries Association, which represents shipbreakers in Alang, the western India city that’s home to the world’s largest scrapping industry. Seven capsizes are currently being taken apart on the city’s beaches, he said.

“Capesizes are sure to be a big proportion of business moving ahead,” said Kanakia. “Shipowners just don’t have sufficient cargoes.”

To contact the reporter on this story: Kyunghee Park in Singapore at kpark3@bloomberg.net

To contact the editor responsible for this story: Neil Denslow at ndenslow@bloomberg.net

Source: Bloomberg.By Kyunghee Park – 29 Jun 2011

http://www.bloomberg.com/news/2011-06-29/scrapping-record-fails-to-end-nightmare-for-shipowners-freight-markets.html

Baltic index falls, capesize ships see coal boost:

• Panamax market still subdued
• Fleet growth still overhanging dry bulk industry

LONDON, June 22 (Reuters) - The Baltic Exchange's main sea freight index. BADI, which tracks rates to ship dry commodities, fell for a fourth session on Wednesday although firmer coal export trade boosted earnings for larger capesizes.

• The overall index fell 0.21% or 3 points to 1,406 points.
• It has declined 21% so far this year.

"Capes are marginally rebounding on the back of strong Australian coal exports," said Georgi Slavov, head of dry research and structured products at broker ICAP Shipping.

"Panamaxes should react soon. Unfortunately they are moving sideways in the last couple of weeks."

The outlook for dry bulk rates has been grim because ship supply has outpaced demand to ship commodities.

The situation has been compounded by the deployment of a vessel owned by top iron ore producer Vale (VALE5.SA) of Brazil, the first of the world's largest dry bulkers, known as very large ore carriers (VLOCs) to enter the fleet. [ID:nLDE75L128]

There were also expectations that India's monsoon would reduce iron ore exports as rivers rise, hampering goods transportation.

The Baltic's capesize index .BACI rose 1.31%, with average daily earnings to $10,453. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.

Brokers said they were looking for signs of a pick up in coal demand from China, facing its worst power shortages in years.

The Baltic's panamax index .BPNI fell 1.62%, with average daily earnings at $14,580. Earnings for panamaxes, which usually transport 60,000-70,000 tonne cargoes of coal or grains, have more than halved since the same period last year.

Oversupply Pressures

The index has more than halved in the past 6 months, nearing levels last seen during the financial crisis in 2008.

Barclays Capital said fresh coal cargoes from Australia and Indonesia to China were expected to support capesize rates in the Pacific, with panamaxes set to benefit from Russia's grain export season which starts in the third quarter. Smaller supramax vessels were also likely to get a boost from India trades once the monsoon season ended there.

"Yet despite all these positives, the demand for ships to ply on these routes will not buoy freight rates up as the surplus feet will easily absorb all the orders," it said in a report this week.

Braemar Seascope said 13.6 million deadweight tonnes (dwt) of bulkers had been scrapped in the period from January to May, including 7.1 million dwt of capesizes.

The broker said if scrapping continued at the current pace for the rest of the 2011, it could reach 32.6 million dwt, more than three times the previous record set in 2009.

"These levels of demolition are very encouraging. Deliveries are also likely to run behind schedule this year. Nonetheless, oversupply will still be on the agenda in January 2012," said Braemar research manager Mark Williams.

Source: Reuters. By Jonathan Saul. 22 June 2011 

http://af.reuters.com/article/energyOilNews/idAFLDE75L1PN20110622

Capesize Ship Scrapping at Record High:

Scrapping of large capesize vessels in the first five months of this year has hit its highest level since 1996, although rising fleet growth will pressure the dry bulk market, shipbroker SSY said last Thursday.

The outlook for dry bulk shipping rates has been grim because ship supply has outpaced demand for shipments of commodities. SSY, one the world's biggest ship brokers, said 35 capesizes had been scrapped so far this year.

"We have also had another 11 sales of capesizes for scrap, but they have not actually reached the breakers as yet," said Derek Langston, a senior director at SSY Consultancy and Research.

"Those 35 that have already reached the shipbreakers in the first five months of this year have already surpassed the previous annual record of 24 capesize ships being scrapped in 1996," he told Reuters.

Average capesize earnings have fallen to below $5,000 a  day this year, below operating costs estimated at $7,500 to $8,000 a day, compared with over $200,000 a day before the economic turmoil in 2008. They reached $9,758 a day on Thursday, Baltic Exchange data showed. SSY estimated that new building deliveries this year would total over 90 million deadweight tonnes (dwt) compared with 78.7 million dwt last year.

Net fleet growth was forecast to reach over 70 million dwt this year even allowing for record scrapping levels, Langston said. Net fleet growth last year was 76.8 million dwt.

Langston said 105 capesizes had entered the fleet since the start of the year, with a further eight ships converted from tankers into capes. That compared with 214 capes delivered last year and a further 17 conversions. Capesizes typically haul 150,000 tonne cargoes such as iron ore and coal.

"The freight market is clearly facing downward pressure from the supply growth in this fleet," Langston said. Other shipping analysts said earlier this week the dry freight market was expected to remain low for up to 12 to 24 months as fleet growth takes its toll. Broker Fearnleys said a major upturn in rates was not expected before the end of 2013.

Source: Maritime Connector. 13 June 2011

http://www.maritime-connector.com/NewsDetails/13321/lang/English/Capesize-ship-scrapping-at-record-high.wshtml