The average scrapping age for bulk carriers has dropped from 28.2 yr in 2013 to 25.3 yr on the back of oversupply in the fleet and a Chinese government scrapping subsidy, according to international shipping association, BIMCO.
“All ship owners have dug into the pool of 1995 to 1997 built bulk carriers in recent years when choosing ships for scrapping,” said Peter Sand, Chief Chipping Analyst at BIMCO. “Chinese ship owners in particular have scrapped even younger ships built in 1998 – 2000. They were encouraged to do so by a subsidy programme. With the extension of the programme, it’s likely more of the same will show in 2016 and 2017.”
In the past three years, 23% of ships built between 1995 and 1997 have been scrapped – total of 11.8 million DWT. Meanwhile, two-thirds of ships built in the 1980s that were still in operation in 2012 have now been scrapped with the next two years looking likely to wipe out the remaining.
“Even though all older ships are not scrapping candidates by default, they do ‘sit far out on the bench’ in most cases when the over decides which ship doesn’t make the cut anymore,” said Sand.
“In a heavily oversupplied market as we see in these years, scrapping remains the only permanent way to better the fundamental balance,’ concluded Sand. “Idling and slow steaming, as effective as they may be, are only temporary measures, are not part of a sustainable solution.”
Bulk carrier rates have been at historic lows in 2016 as falling demand for seaborne-traded bulk commodities, particularly in China, coupled with continuing – although slowing – fleet growth – has depressed the market, throwing many ship owners into the red.
Shipping analysts at Drewry recently said that, while shipping rates would start to improve from 4Q15, it did not expect the dry bulk shipping market to return to profitability until 2017.
Edited by Jonathan Rowland.
Read the article online at: https://www.worldcoal.com/handling/22122015/average-scrapping-age-for-bulk-carriers-drops-3326/