Near record rates for Dry Bulk Scrapping

By Finance

The market of dry-bulk scrapping vessels approaches record numbers, as reported by BIMCO in the end of the last week.

According to Bimco, a total of approximately 8,7 millions dead weight tons (DWT) of 52 Capesize vessels were sold for demolition in the first third of 2015. The scrapped quantity is double than the number of ships sent for dismantling in 2014. The accounted numbers come near to 2012 levels, when a record of 70 scrapped Capesize ships was achieved.

Near record rates for Dry Bulk Scrapping

Image: IMO

Capesize ships are the largest cargo ships which are too large to transit the Suez Canal (Suezmax limits) or Panama Canal (Panamax limits) and so have to pass either the Cape of Good Hope or Cape Horn to traverse between oceans. They are usually bulk carriers transporting bulk cargo like grain, timber and iron ore.

Peter Sand, BIMCO’s Chief Shipping Analyst said:

"The increase in Capesize scrapping comes at a much needed time for the market. Looking at the development so far this year the fleet growth has actually been negative, with a reduction of 0.8 percent."

The BIMCO’s analyst said that the company expectations were exceeded regarding the record numbers for 2015 and it would turn out to be beneficial for the industry.

There are long-standing trends of oversupplies of ships and falling dry bulk demands, which make the shipowners to look for options to scrap their vessels.

It has been reported a rise for 2015 in the demolition of Panamax vessels, which are the second largest dry bulk segment.

In general, the decrease in demand, along with the supply of very cheap Chinese Steel on the market, has reduced the price for the material.

The upturn and near-record rates of scrapped vessels are achieved despite the falling prices for ships sold for demolition.