Last year set a record for the number of tankers sold for recycling with VesselsValue recording over 200 vessels removed from service.
VesselsValue’s senior analyst Court Smith said “2018 was a banner year for recycling activity in older tanker tonnage. The number of removals from the VLCC fleet were in line with our highest estimates of tonnage removal.”
He listed three main factors that cause an owner to remove a ship from service: a higher price being offered by recycling buyers; current, as well as expected, spot market returns; and the cost of its next drydocking.
The offshore sector also experienced a leap in sales for recycling, driven by Tidewater, which sent 21 vessels to be scrapped.
What was unusual in 2018 was that the demand for scrap was relatively flat in 2018.
However, signs are looking positive in 2019, with Indian local steel plate prices rising and India has “seen a stunning surge this week, firming up by INR1,000, subsequently leaving the market better placed by about US$15/LDT from the last week.”
“The currency too has gained some ground, settling into an encouraging pattern and ending the week in the high INR70s against the US dollar.”
Although 2018 was a dynamic year for tanker and offshore recycling, with many vessel types removed at record levels, others sectors slowed to essential deletions only.
Dry bulk carriers and container ships recorded their lowest scrapping levels since 2012 by number of vessels.