‘Aggressive’ cape scrap price could entice owners to head for the beach

‘Aggressive’ cape scrap price could entice owners to head for the beach

Capesize owners could be swayed to scrap more ships following the very firm $345 per ldt Star Bulk achieved for the scrapping of its 2001-built Star Eleonora.

Now bound for a beach in India, the deal has made the ship’s owner a very tidy $8.26m. Clarkson Research described the price fetched for the vessel as “aggressive” in its latest weekly report.

The research unit that belongs to the world’s largest shipbroker suggested the scrap deal may entice more owners to sell their older, larger bulkers instead of passing special survey, which seems to be the current trend.

With dry bulk rates now heading for their traditional Q1 lull calls for greater volumes of scrapping are growing. Latest statistics from Seasure Shipbroking show charter rates for capes dropped $2,306 last week alone to close at just $4,561 a day, well below operating costs.

Last week, in Precious Shipping’s annual report, veteran managing director Khalid Hashim made an urgent call to fellow dry bulk owners to scrap more ships.

The Thailand-based owner stressed shipowners scrap their older tonnage throughout 2017 as quickly, and in as large numbers, as they did in the first half of last year.

“If scrapping doesn’t get off the back burner, then we may experience pain, not just in Q1, but during the whole of 2017,” Precious warned.

Global shipowning body BIMCO warned recently that far more scrapping is needed in dry bulk to try and right the still troubled supply/demand equilibrium.

BIMCO said it is vital that 30m dwt of bulkers are scrapped this year as there is a serious influx of new tonnage coming in from Asian yards this year and next.

“This is not a tall order in theory, but the slowdown in scrapping seen since June 2016 causes alarm bells to ring,” BIMCO noted. BIMCO expects the supply-side to grow by around 1.6% in 2017, as compared to 2.2% last year.

Also cautious on prospects for the sector has been the UK’s Maritime Strategies International (MSI) which predicted a “depressed” year ahead in a recent report.

Will Fray, senior analyst at MSI, said a combination of factors will continue to shape the market during 2017, but in general, rates will remain depressed.

“In our base case there is little to suggest any significant changes to the market through the remainder of 2017 and it is MSI’s view that freight rates will remain depressed. Overall, we forecast deadweight demand growth will broadly match supply growth at around 3-3.5% year on year. On this basis we see little reason for freight rates to move meaningfully, other than for short-lived or localised spikes,” he said.

Sam Chambers

Starting out with the Informa Group in 2000 in Hong Kong, Sam Chambers became editor of Maritime Asia magazine as well as East Asia Editor for the world’s oldest newspaper, Lloyd’s List. In 2005 he pursued a freelance career and wrote for a variety of titles including taking on the role of Asia Editor at Seatrade magazine and China correspondent for Supply Chain Asia. His work has also appeared in The Economist, The New York Times, The Sunday Times and The International Herald Tribune.

Related Posts