Ship scrap prices may plummet

Demand is increasing at a time when shipbreaking facilities are full to capacity and could increase if more tanker owners look to sell vessels for scrap.
A broker, who preferred not to be identified, told Lloyd’s List: “We believe the main trend will be for prices to go down further to below US$200 per ldt. Up to now, despite huge supply , prices have remained above US$200 and relatively firm by historic standards.
“The average price between 1988 and 2001 was about US$170 per ldt and prices are still above that level.
But in the late 1990s, yards were buying vessels for demolition for as little as US$100 per ldt and we could see such prices back again.”
Downward pressure on prices was indicated late last week when two bulk carriers came back on to the market because of non-performance by the buyers at the original prices, the broker said.
These included a panamax bulker that had been committed to China for US$225 per ldt and a 15,000 dwt vessel that was previously sold to Indian breakers for US$260 per ldt.
To date, most of the ships being sold for recycling have been bulk carriers, containerships and other dry cargo vessels, but relatively few tankers.
In the first four months of this year, some 120 dry bulk carriers and 51 containerships were sold for scrapping but only 33 tankers.
Demand for scrapping could be boosted by interest from tanker owners, as tanker freight rates have fallen sharply and more single hull ships are phased out before the 2010 deadline.