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ANALYST OBSERVES SURGE IN SHIP SCRAPPING

ANALYST OBSERVES SURGE IN SHIP SCRAPPING

Friday, August 13, 2021 

Shipping data provider VesselsValue has analysed the recent trends and changes across the ship demolition market, looking at the increasing scrapping numbers seen so far in 2021, and sees a continuing rise.

The company's latest review examines the surge in activity and the breakdown of the demolition market over the last six months, finding that tanker vessels are currently accounting for nearly half of all cargo vessels scrapped. The increasing scrapping numbers are a direct result of exceptionally high scrapping rates, which are continuing to rise throughout 2021.

According to the company, the first half of 2021 saw 275 cargo vessels sold for scrap, up 40% and 33% compared to 2020 and 2019, respectively, with a total scrap value of over US$1bn. The 275 scrapped vessels have a combined DWT of 11.9m. 131 tankers were scrapped in the first half of 2021.

The previous cargo 10-year high of US$560/LT was quickly surpassed at the start of June 2021 and current prices are closing in on a 13 year high. In the first half of the year, the scrap price increased approximately US$0.86 every day. If this growth rate continues then the 2008 all time high of US$754/LT will be reached by the end of 2021.

However, with containers and bulkers commanding good rates on the charter market, and tankers having done so previously, some owners are hanging onto their vessels despite the huge temptation from scrapping prices.

Review author Guy Cooper concluded: "Extreme scrap prices, costly new environmental regulations (sulphur cap, BWMS etc) and an ever ageing fleet was the perfect blend to see scrapping numbers blown out of the water and some impressive records to be set."

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