Dealing with the obvious oversupply problem
in the dry bulk market is the main solution for the dry bulk market to recover
sooner, rather than later, given that demand-wise, not many upticks should be
expected. As such, based on data from shipbroker Intermodal, in the first half
of 2016, 373 bulkers and General Cargo ships were scrapped, representing 23.8
million tons of dwt carrying capacity.
In its latest weekly report, the shipbroker
noted that “comparing the first half of the year with the same period in 2015,
we observe that there is an increase overall in terms of dwt and a small
decrease in terms of vessels, indicating that bigger dwt vessels have been
scrapped so far this year. In terms of dwt, the Capesize figure is up by 3%,
the Panamax figure is up by an impressive 40% and the Handymax/Supramax and
Handysize figures are up by 33% and down by 31% respectively”.
According to Intermodal’s SnP Broker, Mr.
John N. Cotzias, “the higher volume of demolition activity this year has pushed
down by 3 years the average demolition age of dry bulk vessels compared to that
in 2015. In 2016 so far the average age is 23.5 years, compared to 2015’s 26.5
years, and 29 years witnessed back in 2014. The average demolition age for
Capes is now less than 21 years and in just two years this figure has been
reduced by more than 5 years for all bulker sizes”.
Cotzias added that “it is also worth noting
that demolition activity in Container vessels has also firmed during this year.
In the first half of 2016 the scrapping of Container Ships is up by 3 times
compared to H1 2015. 79 Container vessels of 265k TEU capacity were scrapped
during the first six months of the year, an overwhelming figure when compared
to the 61 vessels of 136k TEU scrapped during the entire 2015. In 2016 so far
585 vessels of all types have left the active fleet, representing 29.8mil tones
effectively being removed from the “chase” of cargoes. 80% of all dwt scrapped
comes from Bulkers and General Cargo ships, 13% from Containers and only 4%
comes from Tankers”.
He also noted that “in H1 2015 we had 636
ships of 27.9mil dwt across all sectors scrapped. 2015 ended with 988 ships of
40.5mil dwt removed. If the same pace continues and we follow a similar 2nd
half trend as that of 2015, we estimate that with all other things being equal,
i.e. freight rates remaining stable across all sectors and that during H2
scrapping activity usually slows down, we could well see 2016 ending with
850-900 vessels and 42-47mil tons being scrapped. Given that global demand
growth appears to be static, the only way to bridge the gap between supply and
demand in both the Dry bulk and the Container sectors is with increased
scrapping. Let’s hope that for the sake of an improved fleet balance, scrapping
activity will continue at a healthy pace during the remainder of the year”,
Cotzias concluded.
Meanwhile, in the demolition market this past
week, Intermodal noted that “Indian breakers were once again behind all the
demolition activity that took place in the subcontinent last week, with
reported prices reflecting determination on behalf of local buyers, who are
still playing catch up with the competition, to regain lost market share
following the past months during which both Bangladesh and Pakistan pretty much
reigned over the demolition scene. As demolition activity remains much softer
compared to the weekly volumes we have been witnessing during the greater part
of 2016, one would expect prices to be in sync with this downward trend, as on
top of a less active market, the Ramadan together with the Eid holidays and of
course the quieter weeks due to the monsoon period have been considerably
weighing down on sentiment. Prices in the Indian subcontinent have during the
past month nonetheless settled at around $245-250/ldt for dry bulkers and
around $265/ldt for tankers, which is still roughly $20/ldt higher compared to
the year’s lows witnessed in the region back in February, reinforcing the sense
that a price floor has been created. Prices this week for wet tonnage were at
around 165-270 $/ldt and dry units received about 145-250 $/ldt”.
Source: Hellenic
shipping news. 14 August 2016
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