Since the beginning of last year less than 60 tankers over 25,000 dwt have been scrapped, roughly half of what was scrapped in 2018. In particular, just 4 VLCCs have been demolished over the period, compared to 38 in 2018. The stats are similar for Suezmaxes and Aframaxes/LR2s. In these size groups, 8 and 6 tankers have been sold for scrap since January 2019, versus 22 and 53 units respectively over the course of 2018. There are several reasons for this collapse. Intense demolition in 2018 temporarily reduced the pool of scrapping candidates. Then the extreme strength of the tanker market seen between October 2019 and April 2020 removed any incentive to scrap, even for those who intended to do so. In fact, some tankers, reported sold for scrap during the period, were renamed and continued trading. Further, the widespread closure of demolition yards in the Indian subcontinent for much of the 2nd quarter of 2020 and the collapse in scrap prices in May 2020 to a three year low did not help matters either. However, shipbreakers resumed operations in early summer and prices have rebounded to a six-month high as yards bid aggressively to fill capacity.
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2020 10 02 Time to Scrap |
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