Splash 24/7 – Record shipbreaking volumes likely in 2016

Written by Sam Chambers

Access the original article

25 January 2016 – Both BIMCO and Clarkson agree that this year will be a record one for shipbreaking volumes.

“With an expected tidal wave of tonnage on the horizon, it would appear that the market has still not reached a ‘bottom’ level. We have already seen about ten Panamax and Capesize units sold for recycling this year, and it looks like 2016 could be another record breaker,” shipbroker Clarkson said in a weekly report.

Shipowner body BIMCO echoed the sentiment in a recently released market report that states 2016 will likely be “the busiest year on record for shipbreaking” of dry bulk vessels, with a capacity of 40m dwt to be sold for demolition, compared to last year’s 30m dwt total.

Separately, Deutsche Bank has just issued a report suggesting that scrapping in the dry bulk sector will likely surpass the number of ships sent to breakers in 1986 to set a new record this year.

With a huge variation in prices, it is difficult to find a firm level of where the market lies, Clarkson stated. “With price fluctuations almost every hour, it has been difficult for brokers to provide guidance to sellers on the possible price for their available tonnage,” the broker added.

Scrap prices are reported by BIMCO as”very disappointing”, thanks in large part to South Asian nations now taking cheap new Chinese steel rather than relying on scrap.

Owners are fighting historically bad dry bulk markets with the Baltic Dry Index plunging to record lows in the first few weeks of 2016. As well as torching ships, more and more bulk carriers are being laid up. Brokers tell Splash the number of idled capesizes could surpass 100 vessels soon.