Ship Recycling Activity Down 14%

Pic for Representation Purpose only

Padmesh Prabhune

Ship recycling activity has fallen by almost 14% so far this year, according to data from Xclusiv Shipbrokers, despite the fact that prices haven’t fallen that much in Southeast Asia.

In its latest weekly report the shipbroker stated that despite the fact that the demolition market is at almost similar levels as one year ago, with prices in India, Pakistan and Bangladesh being down 7%, 10% and 2% respectively, while it is roughly 30% up in Turkey, a significant drop in the total demolition volume has been witnessed as compared to previous years. Lack of vessels and financing approvals in Bangladesh and Pakistan is said to be one of the reasons for the lower prices.

According to the report, as of 18th August 2023, total 129 ships had gone for scrap, that included Tanker, Bulk carrier, Container and Gas vessels. This is 14% down as compared to 150 ships for the same period of 2022, and is the lowest since the past five years.

Although Bulk carrier and Container segments witnessed a significant increase in number of vessels sold for recycling, the Tanker market volume of scrap is at its lowest since at least 2018. The increase in number of Container and Bulk carrier vessels that went for scrap is in line with the consideration of the freight rates reduction in both markets, which inevitably have pushed owners to scrap their older units.

The majority of dry bulk ships went for scrap in Bangladesh representing almost 80% of total bulk carrier sales. On the Container market, a total of 41 vessels with an average age of 29 years went to scrapyards, a significant rise compared to 2022’s same period demo sales, when only 2 Container vessels were demolished between January and 18th August of 2022. Most of Containerships went for scrap in India taking 44% of total Container demolitions, followed by Bangladesh that attracted about 37% of total Container scrap sales.

The report also categorically maintained that the Gas market’s demo sales are almost at the same levels compared to one year ago. From January till 18th August 2023 a total of 12 gas carrier vessels went to scrapyards with an average of 34 years as compared to 9 gas carrier vessels demolished in 2022.

-Marex Media