LNG scrapping sets annual record
LNG Carrier Demolition Sales Hit Record Highs
In a surprising turn of events, the demolition sales of LNG carriers have reached an all-time high with nearly 30% of the year still remaining. According to Clarksons Research, approximately 0.8 million deadweight tons (dwt) of LNG carriers have been sent for demolition this year, primarily driven by weak market conditions and a growing number of steam turbine units being disposed of.
Market Trends and Implications
The trend of increasing LNG carrier demolitions has persisted over the past year, with expectations for this pattern to continue. A broker update from Gibson highlighted that demand for older steam-turbine LNG vessels is declining, leading to numerous unsold units being laid up. As a result, ship recyclers are currently relying heavily on gas carriers destined for South Asia, which have become the primary source of business in this niche market.
Interestingly, while LNG carriers are seeing a surge in demolition, other segments are not faring as well. The container shipping sector is anticipated to record its lowest demolition numbers in two decades, as noted by Clarksons. The recycling market is grappling with negative sentiment, influenced by several factors including persistent currency volatility, recent tariff changes in the Indian subcontinent, and decreasing steel demand in domestic markets. Furthermore, a tightening supply of tonnage is complicating the landscape for recyclers, as they navigate these challenging conditions.
As the year progresses, industry stakeholders will be watching closely to see how these trends evolve, particularly in the LNG sector, which remains the only segment currently opening up for recycling. The outlook suggests that while LNG carrier demolitions may continue to rise, other shipping segments may struggle to keep pace.
