While the shipping industry struggles through
a historic downturn, ship scrapping business is seeing accelerating demand,
reports WSJ.
The global economic slowdown is putting
shipping through its most bruising period since the 2008 financial crisis.
With the capacity running some 30% ahead of
shipping demand, orders for new vessels have fallen to a record low this year
and companies can’t get rid of ships fast enough.
In the five years to last year, owners
ordered an average of 1450 ships annually. This year orders to last month fell
to 293 vessels, according to British marine data provider Vessels Value.
About 1000 ships that have the combined
capacity to haul 52 million tonnes of cargo will be dragged on to beaches, cut
into pieces and sold for scrap metal this year. That is second only to the
record amount of capacity of 61 million so-called dead weight tonnes that were
scrapped and recycled in 2012.
A deeper sign of the downturn is that
carriers are dumping ever-younger ships: vessels typically face recycling at
about 30 years, but the average age of ships now getting scrapped is about 15
years.
Drewry’s Container Forecaster found that, for
the first time, 450,000 TEU of containership capacity is expected to be
scrapped in just one year, as the containership sector recognizes that there
are far too many ships chasing too little cargo.
A record number of around 150 container
vessels are expected to be scrapped in 2016 but it will not be enough for an
industry battling over capacity, low demand and falling rates, Drewry said.
The world's largest container shipping
company, Maersk Line, a unit in conglomerate A.P. Moller-Maersk, said in
February it would scrap more vessels and therefore begin to use four shipyards
along India's Alang beaches to handle it.
In the past, recycling a ship has typically
generated about one-quarter of the price of a new vessel of the same type and
size. But owners say a drop in the price of steel has cut the rate of return to
an average of 10-15 per cent of the price of a new ship.
South Asian scrapyards recycle about 75 per
cent of dumped ships every year. The remainder goes to China and Turkey.
Source: marine
link. 16 August 2016
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