(Written by Geoff Garfield)
5 October 2012 - A long-standing ship-demolition record has been broken as tough markets trigger an ongoing disposals surge – but with owners flooding the market it remains to be seen how long current prices will be sustained.
Ship-scrapping records are tumbling as owners saturate the market with vessels.
Some 43.29 million dwt of ships have been reported as sold for demolition in the first nine months of this year, breaking the record set in 1985, according to broker Ed McIlvaney.
It means that with almost three months of the year remaining, the prospect exists of more than 55 million dwt going to the torch in 2012.
EBM Shipbroking’s McIlvaney says his records show that 935 vessels of 42.57 million dwt were reported as sold for scrapping back in 1985 when a glut of vessels and weak demand triggered a prolonged slump in the shipping markets.
“This long-standing record has finally been shattered as the past month has seen the sale of a further 112 vessels, bringing the running total for the year up to 908 of 43,288,923 dwt [9,264,559 ldt],” said McIlvaney.
Figures published by shipbroker Clarksons show that overall demolition sales are up 39% on an annualised basis.
Not surprisingly, leading the charge are bulkers with, says Clarksons, some 25.4 million dwt already sold for demolition in 2012, as compared with 23.1 million dwt in the whole of 2011, an annualised jump of 47%. In 2010, a mere 6.4 million dwt of bulkers were scrapped.
Figures differ between brokers but, according to McIlvaney, some 398 bulkers have been sold for demolition this year, including 65 capesize and very large ore carriers, as well as 83 panamaxes.
The “seriously troubled” container market has witnessed 123 units sold, while on the wet side, EBM’s records show that 12 VLCC/floating production, storage and offloading (FPSO)/floating storage unit (FSU) ships have been sold so far in 2012, as well as 27 aframaxes and 13 combination carriers (OBOs).
EBM’s nine-month total of over 43 million dwt for all ship types compares with 688 vessels of 30.52 million dwt in the same period of 2011.
In September alone, 5.21 million dwt of ships were sold for demolition, of which 107 of 4.92 million dwt were dry cargo or miscellaneous types. The less-distressed tanker market saw just five tankers or OBOs totalling 297,110 dwt despatched.
EBM notes that India is again the leading scrapping destination this year with 323 sales registered, while Bangladesh, despite its legal problems, has taken 210 vessels. China has secured 123 ships, Pakistan 95 and Turkey 63. The broker’s figures are cross-checked against anchorage arrival lists where available.
In its last market report, broker Galbraith’s commented: “The volume of tonnage coming into the market continues to rise and subsequently the sector remains saturated.”
It says that with the vast number of vessels being offered for demolition, it tends to be only the “perfect” ships that buyers currently compete for ferociously. Bangladesh is said to have been quiet because its yards are full.
Braemar Seascope warns that it remains to be seen how long current prices can be sustained given the volume of tonnage on the market.