Exim News Service reported that large numbers of containerships are being scrapped for the first time in almost 5 years as ocean carriers and ship owners reduce capacity in the face of collapsing freight and charter rates.
According to the leading London based shipbroker, Clarkson, older ships, built in the 70s and 80s are going to ship breaking yards in India, Pakistan and Bangladesh as 12,000 TEUs of unwanted capacity have been scrapped recently.
As per report, scrapping rates have plunged from USD 781 per LDT paid by Bangladesh breakers for a 1977 built containership in early August to USD 535 per LDT paid for a 1981 built Zim vessel in early October to just USD 350 per LDT for the 1980 built MSC Fribourg.
The report said that Goldenport, a Greek charter ship owner got USD 4 million for scrapping a 2,512 TEU, 1976 built vessel in mid August but only USD 1.3 million for a sister ship just 5 weeks later.
At the same time, ship scrapping has accelerated in India, Bangladesh and Pakistan after plunging prices of obsolete carriers attracted buyers. Global Marketing Systems Inc based in Cumberland, Maryland said that "Market fundamentals at India and Bangladesh leveled off and local recyclers came back to the bidding tables with optimism and willingness to buy."
The report added that increasing demolitions will place a check on fleet expansion at a time when rates for leasing out carriers have plummeted. A slowing global economy, constrained credit, an ore pricing dispute between Brazil and China and a growing fleet caused the Baltic Dry Index to dip by 93% since May 20.
GMS said that 1 tanker, 6 ore, coal or grain transporters, 2 containerships and one car carrier were sold in India, Pakistan and Bangladesh. It added that while Bangladeshi banks are issuing letters of credit to buyers because the trade is sufficiently profitable in India banking conditions have not improved much.
Source : Steelguru