Capesize recycling activity to remain low in 2025, as first vessel reaches scrapyard

Shipbrokers recently reported 2000-built, 172,571-dwt Winnie has arrived in Bangladesh for recycling. Pricing details remain undisclosed. MarineTraffic data confirms Winnie is currently at a Bangladeshi scrapyard.

According to shipbroking data, Winnie is the first Capesize bulk carrier to be scrapped this year, with most demolition activity so far concentrated in the Panamax and Supramax segments.

BRS Shipbrokers head of dry bulk research Wilson Wirawan told Riviera Capesize (160,000–220,000 dwt) demolition activity peaked in 2015 and 2016, with 49 and 50 vessels scrapped, respectively. However, since 2020, the annual demolition count has remained below 15, with only eight, 11, and four vessels scrapped in 2022, 2023 and 2024, respectively.

One key factor behind this decline is that average Capesize freight rates have remained above cash breakeven operating levels post-pandemic. Daily rates peaked at US$33,333 in 2021 and remained healthy at US$22,593 during 2024.

Larger vessel segments have followed a similar trend. According to BRS Shipbrokers data, very large ore carriers (VLOCs, over 220,000 dwt) reached a demolition peak in 2020 with 26 vessels scrapped. This number dropped to 12 in 2021, just one in 2022, and none in 2023 or 2024.

Scrapping to remain low  

Mr Wirawan expects 2025 to follow a similar pattern. "It is unlikely we will see strong demolition activity," he said, adding expected C5TC rates this year, based on recent FFA prices, are estimated to be around US$19,000/day, well above 2022 and 2023 levels.

Additionally, demand for large bulk carriers is being driven by the Simandou iron ore project in Guinea, set to begin production by the end of 2025. “In anticipation of this development, Chinese owners have been steadily acquiring secondhand large-sized tonnage since last year,” Mr Wirawan highlighted. The Simandou project is expected to reach a maximum output of 120M tonnes per annum by its second year of operation, according to Bloomberg.

Another factor limiting demolition is the scarcity of replacement vessels. Shipyards remain fully booked for the next few years due to recent newbuilding surges. 

“Scrapping an ageing but still cash-accretive asset, while there’s some visible upside in the Atlantic Basin, might not be that appetising for shipowners,” Mr Wirawan added.

Capesize market rebound

The latest Capesize demolition sale coincides with a recovery in the charter market, following a slow start to the year. In its latest weekly report, the Baltic Exchange noted a strong upward trajectory in the Capesize sector. Average daily spot rates surged 75%, from US$8,620 on 24 February to US$15,074 by 28 February, reflecting improved market sentiment across both basins.

In mid-February, Riviera reported Capesize vessels were earning less than smaller bulk carrier types, including Handysize vessels. However, analysts pointed out such conditions often signal a market bottoming out before a rebound. The recent surge in Capesize rates suggests this reversal may already be underway.