⊗

Ships sent for demolition are rising, and are tipped to increase further throughout 2023 and 2024, but the cash-rich position of shipowners is expected to keep scrapping rates significantly below record volumes experienced in the wake of the global financial crisis. Measured in gross tonnes, last year witnessed the lowest scrapping total for 15 years, according to data from Maritime Strategies International (MSI). Fewer than 220 vessels were demolished over the 12-month period, roughly half of what was seen in each of the two years prior. This drop in activity came despite the fact 2022 also saw scrap prices reach near-record highs. “We expect to see the tide turn on scrapping volumes this year with 2023 already starting off at a steady pace,” predicted Dr Adam Kent, MSI’s managing director. This is primarily driven by containership and dry bulk removals. Over the course of the first seven weeks of 2023, there have been more containerships scrapped than there were in the whole of 2022. MSI is forecasting demolition levels this year to creep up to levels last witnessed in 2017. The figure would be higher, according to Kent, were it not for the fact that owners’ war chests have been well-lined to ride out the downside in the short term. “Next year is when we expect to see the floodgates open with around 50m gt of vessels scrapped, more than we have seen over the course of the last four years combined,” Kent told Splash Extra. This equates to around 4% of the fleet, though with 14% of the fleet currently over 20 years old there are plenty of scrapping candidates out there. Stephen Gordon, managing director at Clarksons Research, agreed with Kent that there are underlying trends toward increasing levels of demolition. “Fleets are ageing, we have had limited demolition in recent years and fleet renewal pressures are growing as emissions regulation and policy ramps up,” Gordon said. There is now a sizeable element of the fleet that can be classed as old, as the vessels that were ordered during the first decade of the century either begin to reach or surpass their 20th year in operation. The average age of the main fleets is increasing with bulkers now at 11.1 years versus 8.7 years five years ago, tankers standing at 11.7 years versus 10.1 five years ago, and containerships at 13.7 years versus 11.4 in 2018, according to Clarksons data. Clarksons estimates that 31% of the current fleet by tonnage would be D or E rated under the recently enacted Carbon Intensity Indicator (CII) assuming recent trading patterns and no changes in speed or the technology status of vessels. Burak Cetinok, head of research at Arrow, argued environmental regulations will eventually lead to higher scrapping over the next few years, but with the possible exception of the container sector, no segment was on course to break any scrapping records this year. “We expect more action in the start of year 2024 instead of the present year even if the trading markets remain subdued,” says a spokesperson for cash buyer Best Oasis, saying cash-rich owners will hold out for any upticks in the container and dry bulk segments while riding the ongoing tanker wave. Hitesh Vyas, a vice president at cash buyer Wirana Shipping, said that as many as 35 capesizes could be scrapped this year if conditions do not pick up for the hard-pressed sector, while there have already been 20 boxships sent for recycling. Overall, Wirana, one of the largest cash buyers for ships to be recycled, is predicting demolition volumes could double this year compared to 2022 with somewhere between 5m to 6m ldt sent for scrap. “Demolition markets have shot up considerably in the last week or so with price levels on offer now considered very firm,” the latest report from Gibson noted, alluding to the “very healthy” $620 per ldt paid for Sinokor’s Xiumei Shanghai boxship.

Demo volumes bounce back

Ageing fleets and renewal pressures are likely to see many more rusty ships take their final voyages this year

⊗

To continue reading, please login below or subscribe here.

Read Next

Costs for armed guards onboard rocket

Reining in black swans

March 2024 Review

March’s tanker rollercoaster

A sense of euphoria sweeps through dry bulk

Costs for armed guards onboard rocket

Reining in black swans

March 2024 Review

March’s tanker rollercoaster

A sense of euphoria sweeps through dry bulk

Maritime CEO Forum Singapore

Maritime CEO Forum Monaco

Advertising

Press Releases

Splash

Splash Extra

Splash Special Reports