Ship Demolitions Seen Above 1985 Record Amid Plunging Returns

Scrapping of merchant vessels from the global fleet in this year’s first nine months exceeded the annual record set in 1985 after returns plunged, according to Clarkson Plc, the world’s largest shipbroker.

A total of 960 vessels with capacity of 44.1 million deadweight tons were sold for demolition through September, the London-based company estimated in a monthly report published today. That will climb to 57 million tons by the end of the year, Clarkson said.

“Much of this increased activity has been due to the challenging earnings environment, which has been exacerbated by the continued issue of vessel oversupply,” the shipbroker said. “This has not only led many owners to consider scrapping more vessels, but also younger vessels.”

Scrapping came to 42.6 million tons for all of 1985, Clarkson said. A total of 1,955 new ships with capacity of 124.7 million tons left yards and entered service in this year’s first nine months, the report showed.

Daily average returns for Capesize vessels, the biggest iron-ore carriers, plunged 44 percent from the start of the year to $13,430, according to the Baltic Exchange in London. The largest oil tankers plying the benchmark Saudi Arabia-to-Japan route are losing $4,252 a day, its assessments show.

Source: By Michelle Wiese Bockmann. 18 October 2012

http://www.bloomberg.com/news/2012-10-18/ship-demolitions-seen-above-1985-record-amid-plunging-returns.html