The first 3 months of 2016 are shaping up to be the busiest quarter on record for bulk carrier demolition as owners fight to restore balance in supply-demand capacity, data from Clarksons Research shows.
In the first 9 weeks of the year, 120 bulk carriers of 10.1m dwt have been reported sold, a pace that, if continued, will see the current record of 10.9m dwt set in Q2 2015 surpassed.
“Such high levels of demolition clearly reflect the depressed state of the bulk carrier market in 2016 so far,” Clarksons said.
The average scrapping age for bulk carriers has fallen from 33 years in 2007 to 24 years so far this year, and market conditions are such that vessels built in the 2000s are now candidates for recycling, Clarksons’ data further indicates. In particular, a total of 10 such Capesizes and Panamaxes have been sold since the start of last year.
Therefore, as noted by Clarksons, “owners are getting tougher, even if there might still be some way to go.”
There are still 57.8 dwt of bulk carriers in the fleet aged 20 years or over, including 108 Capesizes and 166 Panamaxes.
“So despite a predominantly young age profile, there are plenty of potential demolition candidates in the fleet. The dry bulk market has bounced back from tough times in the past. For those prepared to “tough it out”, further demolition could help the market return to better times,” Clarksons concludes.