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Record capesize scrappings seen this year

This year is likely going to be a record one for scrappings in the dry bulk sector, according to GMS Shanghai trader Jamie Dalzell.

Vincent Wee, Hong Kong and South East Asia Correspondent

April 7, 2016

1 Min Read
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"We think it's going to be a record for the dry bulk market," he said at a panel on the dry bulk market at the 9th Marine Money Hong Kong Ship Finance Forum. Giving latest figures from his firm, Dalzell said they expected to see 50 capesizes being scrapped within the first quarter alone, which he pointed out is more than half the total number of 96 capesizes scrapped for the whole of last year.

And the imperative for a "scrap now" policy as panel moderator Clarkson Asia managing director Martin Rowe put it, is even greater with prices are set to drop as supply increases and buyers hold back as the year wears on, noted Dalzell.

He pointed out that while prices have come up about 25% in the last month or so, they had dropped by half in the 18 months before that. "We've had a short spike which we don't think is going to last because a lot of owners are taking vessels out of lay-up and going for scrap," he said. Dalzell said current prices of about $300 per long ton (lt) can easily go down to $250 per lt and even the $225 per lt level seen earlier this year.

Bringing another factor into the equation, Wah Kwong ceo Tim Huxley chipped in the fact that the so-called eco premium from more modern ships has so far been negated by the prevailing low oil price.

But this is a tenuous situation. "If the fuel price goes up a lot more of those inefficient ships are going to go, which is what's needed," declared Huxley.

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dry bulk shipping

About the Author

Vincent Wee

Hong Kong and South East Asia Correspondent

Vincent Wee is Seatrade's Hong Kong correspondent covering Hong Kong and South China while also making use of his Malay language skills to cover the Malaysia and Indonesia markets. He has gained a keen insight and extensive knowledge of the offshore oil and gas markets gleaned while covering major rig builders and offshore supply vessel providers.

Vincent has been a journalist for over 15 years, spending the bulk of his career with Singapore's biggest business daily the Business Times, and covering shipping and logistics since 2007. Prior to that he spent several years working for Brunei's main English language daily as well as various other trade publications.

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