After hitting one of its lowest points in 23 years in 2020, the tanker demolition market seems to be back on the right course. Three Very Large Crude Carriers have reportedly already been sold for scrapping.
The French shipbroker BRS announced it in a report in which it estimates a surge in the number of ships being taken off the market in 2021 compared to last year’s figures. In 2021 ninety-three +34.000 dwt vessels will be scrapped, 68 more than in 2020.
A total of 25 VLCC, 14 Suezmax, 21 aframax, two LR and 18 Medium-Range vessels will be phased out. For BRS the merit is to be attributed mainly to the narrowing of the gap between the ship demolition and resale prices which has been reduced from 10 million dollars in December to the current 4 million dollars.
“It only appears to be a matter of time before shipbreaking picks up again,” Ennio Palmesino, an industry expert and Assistant Professor of Geography, Commodities Trading, Geopolitics, told Port News.
“Current scrap-iron price levels are beginning to become attractive compared to those available on the second-hand sales market which is beginning to slow down after months of risky speculation involving selling -off relatively old ships to unknown owners. These vessels were probably used to transport or store crude oil under boycott (Iran, Venezuela).”
Then again, according to Palmesino, it’s possible that “the current dismantling trend, driven by the rally in global steel markets, could be further bolstered by the acceleration of the ‘green transition,’ with shipowners encouraged to recycle ships in the face of environmental compliance costs becoming prohibitive.”
Only six weeks ago, scrapping prices were significantly lower than selling prices on the second-hand market. Today, the gap has narrowed considerably due to a weakening of the latter.
In Bangladesh yards, just to name a few, scrap prices for tankers have risen by 9.6% this year. We are seeing prices per tonne of recyclable scrap-iron in Bangladesh, India, Pakistan averaging $453, up from $365 in early December. In July, however, light displacement tonnage rates were around $298.
Translation by Giles Foster
