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Ships’ Demolition in 2019: Dry Bulkers Head to the Scrapyards, While Tankers are Being Kept in Service

The tide has shifted when it comes to demolition activity so far in 2019. While 2018 was marked by the record breaking scrapping of tankers, this year the trend is opposite, as bulkers have emerged as more likely candidates for demolition. In a recent weekly report, shipbroker Allied said that “the ship recycling market constitutes a crucial leaver in alleviating any excess pressure that may arise in the demand/supply balance of shipping markets. As such it is always of interest to gauge the current interest noted amongst owners to send any of their vintage tonnage to the breakers”.

According to Mr. Yiannis Vamvakas, Research Analyst with Allied, “during the first two months of the year, we have already seen 20 dry bulk carriers having been beached, an encouraging number when compared with 2018, which saw a total of 70 vessels being scrapped during the whole year. More specifically, 15 dry bulk carriers were scrapped within the first two months of 2018, further supporting the view that we have seen an increase in activity in the year so far. Going into deeper detail, we can see that 9 of these dry bulk ships were Capesize vessels, while the remainder was comprised by 1 Panamax, 2 Handysize and several smaller vessels. The number of scrapped Capesize vessels was up by 5,44% year-on-year, with the developments in the freight market during the last few weeks having played a crucial role. Even more impressive is the comparison with the total number of Capesize carriers that were recycled last year, with activity in the year so far having already surpassed the half way mark of the 16 Capesize vessels in total that were taken out of the global fleet last year. At the same time its noteworthy to point out that there are still 76 vessels in this segment that are above 20 years old, leaving room for further recycling activity to take place this year. Another interesting figure is that the average age of Capesize vessels scrapped this year is 22.6, while last year it was 23.3, further pointing out the increased interest noted this year to retire older tonnage. In contrast to this, in the first two months of last year we had already seen 5 Supramax vessels being sent to be beached, while this year owners seem much less keen, despite the ample number of vessels in active service that are more than 20 years old (more than 250 vessels)”, he noted.

“Moving on to the tankers market, and the picture is sharply reversed. Activity in the year so far has plummeted when compared to 2018, with only 15 tankers haven been recycled in the year so far, against the 53 tankers beached during the same period last year, depicting the considerably more robust market conditions prevailing in the market right now. From the 15 vessels noted this year, the vast majority of them were product tankers (MR and LR1 mainly). In the crude oil carrier front, we had a mere 2 Suezmax and 1 Aframax vessels being sold to the breakers, portraying the increasing optimism noted amongst owners with regards to the crude oil trade. In contrast to this, during the same period last year we had already seen 7 VLCC being beached, 2 Suezmaxes and 11 Aframaxes, while the total for the year for all three of these vessel sizes reached 113 vessels. Declined figures are also being observed in the product tanker space as well, with interest being slightly higher compared to the crude side, but still lower than last year. With more than 200 MR and LR1 product tankers being more than 20 years old, there is room for further activity to take shape. However, with demand for oil products expected to improve significantly as we reach closer to the IMO 2020 deadline, this should play a significant role in holding demolition activity to more subdued levels than would have otherwise been expected”, Vamvakas concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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