Reuters reported that the shipping
industry will this year scrap the largest number of oil tankers in over
half-a-decade, driven by weak earnings, firm prices for scrap steel and the
need to prepare fleets for strict new environmental regulations. The surge in
scrapping underscores how the sector is grappling with one of its worst-ever
crises, hit hard after rates for transporting oil plunged to multi-year lows in
the wake of excess tanker supply and tepid demand as OPEC production cuts bite.
Ralph Leszczynski, head of research at
ship broker Banchero Costa in Singapore, said that “The tanker markets are
definitely in a trough at the moment, with one of the worst years in a decade
in terms of freight rates and returns.”
Analysts and industry sources said that
the tough operating conditions are expected to persist until at least the
second-half of 2019.
Estimates on the number of tanker
demolitions vary between the four shipping analysts that Reuters spoke to, with
the most conservative standing at a seven-year high in 2018.
Mr Erik Broekhuizen, head of tanker
research and consulting at ship broker Poten & Partners Inc, said that
About 10.3 million deadweight tonnes (DWT) have been sold for demolition from
January to April this year, compared with 11.2 million DWT for the whole of
2017 and 2.5 million for 2016. Mr Broekhuizen said that “OPEC production cuts
are hurting the market, and as long as they are in place, the tanker market
will remain challenged,” adding that scrapping had picked up for large vessels
in particular.
Since early 2017, members of the
Organization of the Petroleum Exporting Countries (OPEC), Russia and other
non-OPEC crude producers have curbed exports to fight a global oil glut. The
imposition of new US sanctions against Iran looks set to further reduce oil
flows later in 2018, although Saudi Arabia and Russia have discussed potentially
raising output to fill the subsequent void.
Source:
steel guru. 05 June 2018
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