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Demolition rates slow as BDI improves

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World Coal,

An increase in the Baltic Dry Index (BDI) in April saw scrapping rates tail off, after record quarterly demolition figures in 1Q16.

“With BDI hitting an all-time low in February 2016, the dry bulk market saw a quarterly record volume of demolished ships in the wake of it,” said BIMCO’s Chief Shipping Analyst, Peter Sand.

“Subsequently, demolition activity came to a halt as BDI increased from March to a peak at 703 on 25 April 2016,” Sand continued.

Dry bulk demolition and Baltic Dry Index. Source: BIMCO. Clarksons.

According to Sand, the shipping industry “needs to break the trend of halting demolition activity as soon as the BDI improves marginally,” if it is to see a long-term improvement in market fundamentals.

“We can only improve the fundamental market conditions if ship-owners are keeping demolition activity up consistently,” concluded Sand.

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