The dry bulk market is scrapping vessels at near-record rates, according to a BIMCO report released late last week.
Bimco said 52 Capesizes with a total dead weight tons (DWT) of around 8.7 million were sold for demolition in the first four months of 2015. This is already double the number of ships that were scrapped for all of 2014. The numbers are fast approaching 2012 levels when a record 70 Capesizes where scrapped.
Capesize is the largest dry bulk vessel carrying goods such as grain, iron ore and timber.
"The increase in Capesize scrapping comes at a much needed time for the market," Peter Sand Chief Shipping Analyst at BIMCO wrote, adding: "Looking at the development so far this year the fleet growth has actually been negative, with a reduction of 0.8 percent."
The shipping analyst further added that the 2015 numbers have exceeded BIMCO’s expectations but overall could prove positive for the industry. Owners are looking to scrap their vessels amid long-standing trends of oversupplies of ships and falling dry bulk demand.
Demolition of Panamax ships, the second largest dry bulk segment, has also been on the rise this year as has it for the two smallest segments, Handymax and Handysize.
Overall diminished demand coupled with a flood of cheap Chinese steel has reduced the market price for the material. The increase has taken place despite falling prices for vessels that are sold for scrap.