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Tuesday, July 07, 2009

Fewer ships sold for scrap in June; Value of demolition deals stood at $1 billion in first half 09

Tuesday, 07 July 2009

Ships sold for scrap were fewer during June compared to previous months, according to figures released in the latest monthly report of shipbroker N.Cotzias. Still, during the first half of the year a record of 487 ships of all types have been sold for scrap worldwide. They represent a total capacity of 15.8 million tons removed from the supply part of the market, while scrapyards payed a total of 1$billion for these ships. As was expected, dry bulk carriers took the lion’s share, since 186 bulkers were scrapped, while tanker owners chose to sell 61 vessels. Second place was occupied by containerships , since 167 of them left the market. RO-Ros and passenger ferries scrapped amounted to 60 units, while an additional 13 reefers completed the “scrap puzzle” of the first half of the year.
Hellenic shipping companies proved to be the most active in the demolition market, once again showing their responsible face, among their piers. They sold a total of 88 ships of various types, while second place is occupied by Chinese ship owners who sold for scrap 57 vessels. In third place came both Indian and Japanese ship owners, by decomissioning an aggregate of 29 ships each. Among the latest owners to conclude scrap deals were Capital Ship Management of Mr. Evangelos Marinakis, which sold an ’86-built tanker and Target Marine of Mr. Antonis Komninos, scrapping a containership built in 1978.
But the rise of the freight market, both in the wet (tankers) and the dry sector during June proved to be too hard to resist for many owners around the globe. They chose to keep their older vessels on service, trying to exploit the improvement of rates for one more time. As a result a mere 50 ships were sold for scrap during the previous month. Still, the first half of 2009 proved to be record-breaking, suprassing the relative scarp number of the same period of 2008 by almost four times. During the first half of 2008 a total of 113 ships with a capacity of 3.9 million tons had been demolished.
“For container ships, there’s no employment — or what owners do get is less than it costs to run,” Quentin Soanes, director of Braemar Shipping Services, a ship broker, said. “If an owner ... can’t afford to lay off a ship, [he] turns to demolition.” Almost every part of a ship can be recycled, with equipment often resold and the steel used in construction.
Mr Soanes said that scrapping started to pick up in November last year and that the first three months of 2009 were extremely busy.
Tom Peter Blankestijn, who looks after ship recycling for A.P. Moller Maersk, said that he expected to scrap more than 20 ships this year, compared with 27 over the past eight years.
It is obvious among members of the shipping industry that the rate of scrap deals will determine the speed (together with other factors of course) of the sector’s recovery, especially when one considers the element of the new building deliveries. The more ships leave the market, the more space will be created for new ones to take their place and allow for some room for freight rates to return to firmer levels. This is apparent across all ship markets, but it is even more obvious in the dry bulk market, which holds the biggest orderbook.

Nikos Roussanoglou, Hellenic Shipping News