Ship Recycling Down 14% So Far This Year

The ship recycling activity has fallen by almost 14% so far this year, according to data from Xclusiv Shipbrokers. This, despite the fact that prices haven’t fallen that much in Southeast Asia. In its latest weekly report, the shipbroker said that “despite the fact that the demolition market is at almost similar levels as one year ago, with prices in India, Pakistan and Bangladesh being 7%, 10% and 2% down, while in Turkey being roughly 30% up, we have witnessed a significant drop in the total demolition volume compared to previous years. As of 18th August 2023, the number of Tanker, Bulk carrier, Container and Gas vessels that have gone for scrap is 129 ships, almost 14% down compared to the same period of 2022 and the lowest number of at least the past 5-year period. Although Bulk carrier and Container segments witnessed a significant increase in number of vessels sold for recycling, the Tanker market volume of scrap is at its lowest since at least 2018. The increase in number of Container and Bulk carrier vessels that went for scrap is in line with the consideration of the freight rates reduction in both markets, which inevitably have pushed owners to scrap their older units”.

Source: Xclusiv

“More specifically, so far this year, a total of 55 Bulk Carrier vessels with an average age of 30 years were sold for demolition, almost double compared to the same period of 2022. The Panamax and Handymax segments have driven the bulk carrier demolition activity, as 13 Panamax and 19 Handymax vessels have been demolished since the beginning of 2023 (PMX and HMAX consist of almost 24% and 35% of total bulk carrier demolitions respectively). The average of 10 TC routes for Supramax and 7 TC routes for Handysize have suffered a major decline compared to a year ago, having both lost almost 50%, while the average of 5 TC routes for Panamax is down 12% y-o-y. In contrast, the average of Capesize 5 TC routes has increased by 84% y-o-y and as a result a mere 5 vessels went to scrapyards (9% out of total bulk carrier demo sales) with last Cape reported sold for demo back in mid-April 2023. The majority of dry bulk ships went for scrap in Bangladesh representing almost 80% of total bulk carrier sales. On the Container market, a total of 41 vessels with an average age of 29 years went to scrapyards, a significant rise compared to 2022’s same period demo sales, when only 2 Container vessels were demolished between January and 18th August of 2022. We have observed that the FBX has lost almost 74% on a yearly basis and closed the week at 1,522 points. Most of Containerships went for scrap in India taking 44% of total Container demolitions, followed by Bangladesh that attracted about 37% of total Container scrap sales”, Xclusiv said.

On the other hand, according to the shipbroker, “the tanker’s high freight rates driven by Russian’s invasion of Ukraine as well as the western sanctions in combination with the low orderbook maintained the utilization/service of ageing tankers. Since the start of the year, 21 tankers with an average age of 32 years have been sold for recycling, with the majority of them being products and Small/ Chemical tankers. 15 tankers with DWT below or equal to 10,000 have been demolished representing 71% out of total tanker demo sales. This compares to 113 tankers went to scrapyards during the same period of 2022. Interestingly that as of 18th August, we have not seen any Panamax/LR1, Aframax/LR2, Suezmax and VLCC vessels that have gone for recycling, while only 4 MR2’s and 2 MR1’s were sold for demo. Last but not least, the Gas market’s demo sales are almost at the same levels compared to one year ago. From January till 18th August 2023 a total of 12 gas carrier vessels went to scrapyards with an average of 34 years. This compares to 9 gas carrier vessels which were demolished during the same period of 2022”, Xclusiv noted.

Source: Xclusiv

The shipbroker concluded that “optimism may come from the reopening of the Pakistan demo market, following China’s and IMF financial support. Cash Buyers and Gadani Recyclers relaxation in opening and clearing L/Cs & various other payment issues and the shortage of scrap together with improving domestic market sentiment will start lifting imported scrap in Pakistan. This may establish more lucrative demolition options as Pakistan, one of the major demolition destinations has been out of action for a prolonged period. One should point here that recyclers in Bangladesh, since late July 2023 are refraining from offering on ships greater than 8-9,000 LDT, due to inability to secure support from Banks for opening new L/C’s, and this is another drawback for the demolition market”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

Source link

Back to top button