Clarksons Research believes overall ship recycling volumes will rise after identifying spikes in some sectors.
Researcher Sarah Holden said there have been “pockets of increasing activity”, with Chinese owners circulating much older bulkers for sale recently.
And boxship demolition has increased this year to 93,000 teu, against 16,000 teu at this point in 2022.
“Expectations remain that overall recycling will pick up,” she said.
Holden believes the delivery of the large container ship orderbook of 7.6m teu is expected to increase supply pressure.
And she argues that impacts from environmental regulations on the demolition market are still expected to eventually emerge, particularly given the ageing fleet.
About 31% of total gross tonnage is now more than 15 years old.
“In the short-term, recycling activity may remain subdued; seasonal monsoon disruption in the Indian subcontinent is ongoing,” the researcher said.
Scrap prices have recently softened, down $45 per ldt in India since June.
“After a prolonged period of subdued activity and a major fleet-renewal programme potentially pending, don’t be surprised if recycling eventually starts to move out of the slow lane,” Holden said.
Subdued scrap selling
The pace of ship recycling has remained very subdued in 2023 so far, with just 7m dwt sold globally, Clarksons Research calculated.
This represents a similarly slow run-rate to last year, when recycling volumes fell to a 15-year low.
Scrap prices have stood at historically firm levels: the price for a handysize bulker in India has averaged $560 per ldt this year, more than 50% above the average since 2000.
But a range of factors have kept a lid on activity levels.
“Economic and financial challenges in the Indian subcontinent have had a clear impact,” Holden said.
“In Bangladesh, breaking yards have struggled to access letters of credit from banks to import ships for scrap, especially larger units.”
Stronger tanker earnings have also kept older vessels trading.
