Braemar Asks: Is Another Demolition Spike Due?

press release
Friday, February 03, 2012

As the Baltic Dry Index plumbs all-time depths, those with long memories are recalling the dark days of the 1980s for the shipping markets.  However, steel traders can look forward to a bumper year of supply of vessels for recycling this year, if previous experience offers a guide for the 2012 outlook. Bets are now being taken about how many vessels will be forced by the weak freight markets into the arms of recyclers.

 

Globally, ship scrapping capacity has very big limits being a simple business of driving ships onto beaches and cutting them up with oxyacetylene torches. Theoretically, great numbers of ships could be sold for scrap and held as inventory by the scrap dealers, to be pushed up the beach as and when required. Scrap prices for ships of around USD $500 per light displacement tonne (LDT) remain, suggesting that demand for the steel content in ships remains strong.

 

Meanwhile, ship recycling capacity could grow further in coming years. The China State Shipbuilding Corporation President said recently that half of China's shipyards could go bust in the next two to three years. Many of these yards could switch to recycling as, theoretically, could European shipyards, though the economics of recycling in Europe are currently not encouraging.

 

Braemar Seascope estimates that,  in 2011, 24.2m dwt of bulk carriers were sold for scrap, surpassing the 12.0m dwt scrapped in 2009 during the credit crunch, and the 11.5m dwt scrapped in 1998 after the Asian financial crisis, as well as the 15.0m dwt scrapped in 1986, the year the BIFFEX bottomed out at 554 points on 31 July.  2011 was not a record-breaking year for tanker recycling despite the poor freight markets.  For four years from 1982 to 1985 over 20m dwt of tankers were recycled while 14m dwt was sold for demolition in 2010. Last year saw 8.4m dwt of tankers recycled, with the figure for January 2012 maintaining the trend.

 

Scrapping of all types reached 41m dwt in 2011, making it the third biggest year for demolition ever. The second biggest 1986 when 43m dwt was scrapped, and the biggest ever was 1985 with 44m dwt sent to the beaches. Mark Williams, Braemar Seascope research director in London, said: “If macro-economic conditions in 2012 continue to underwhelm and if scrap prices stay at their recent high levels, this year could easily surpass 1985 as a peak year for demolition.”
 

Maritime Reporter August 2014 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

People & Company News

ClassNK's Noboru Ueda Attends KOTC Delivery Ceremony

Mr. Noboru Ueda, Chairman and President of ClassNK attended the delivery ceremony for the M/T Al Yarmouk, constructed at Daewoo Shipbuilding & Marine Engineering Co.

Ulrich Ganz of Bernhard Schulte Joins Tundra

Tundra Group is delighted to announce the addition of the former Senior Company Security Officer (CSO) of Bernhard Schulte Shipmanagement (BSM), Captain Ulrich Ganz,

NYK Opens New Planning Center in Kumamoto

On September 1, 2014, NYK and Kozo Keikaku Engineering Inc. established a stowage planning center for container shipping at the Kumamoto office of Kozo Keikaku Engineering Inc.

Bulk Carrier Trends

Scrap Metal Exporter Pens Terminal Agreement

Port Canaveral Scrap Terminal LLC (PCST), a bulk ferrous scrap exporter, has signed a lease with the Canaveral Port Authority to operate a terminal in the north cargo area at Port Canaveral.

US Rail Jams Force Rush to Roads and Rivers

U.S. coal-burning power utilities are being forced to turn to barges and more expensive trucks to move coal, desperate to shore up stockpiles left dangerously low

Latest Ocean-Going Shipbuilding Orders

Clarkson Hellas notes in its latest 'S&P Weekly Bulletin' shipbuilding orders placed in the dry bulk, tankship, gas carrier and containership sectors, as follows: Dry

 
 
Maritime Contracts Maritime Standards Naval Architecture Navigation Offshore Oil Port Authority Salvage Ship Repair Sonar Winch
rss | archive | history | articles | privacy | terms and conditions | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1770 sec (6 req/sec)