09 March 2016

Pace of Bulker Scrapping is Faster than Ever Before:

Shipbreaking

Analysts with Clarksons Research have reported that bulk carrier demolition is heating up to record levels, with owners selling more – and newer – vessels to the scrappers.

By the end of February, 10 million dwt of bulkers with average age of 24 were sold for demolition – a total of 120 vessels, or roughly two per day. The first quarter is well on track to surpass the record of about 11 million dwt scrapped in Q2 2015, Clarksons said, a reflection of the dismal state of the market. Even a few vessels built in the 2000s are getting cut up.

Clarksons compared the current market to past periods of high activity, like the demolition of six percent of the world’s bulker fleet in 1986, five percent in 1998, and - in 2012, the busiest year on record by tonnage – a total of 33 million dwt sent to the breakers, also about five percent.

The analysts count over 100 capes and over 150 panamaxes aged over 20, suggesting that the pace of demolition could continue for some time.

Steel scrap prices as of February 2016 were less than half of the level seen in early 2012, according to SteelBenchmarker, suggesting that owners could be getting less for their aging vessels than they did during the last banner year for shipbreaking. Scrappers are feeling the pinch – with steel prices so low, many Chinese scrapyards are having a hard time reaching the breakeven point or even selling the scrap at all, said Wu Jun, vice-president of the China National Ship-recycling Association.

Rigs are also going to the breakers in record numbers. 44 were scrapped between late 2014 and late 2015, as many as had been cut up in the previous two decades combined. Drillers Ensco said in February that their firm alone had scrapped a dozen, including one drillship. Analysts say that many more have got to go. “There are at least about 100 rigs that need to be taken out from this market,” said Jon Fredrik Muller, senior project manager at oil and gas consultancy Rystad Energy.

Source: maritime-executive. 07 March 2016

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