A very short supply of demolition candidates has boosted offered scrapping prices to levels unseen in recent memory.

According to shipping market sources in Athens, London and New York, the 171,200-dwt capesize Sunbeam (built 2000) fetched $715 per ldt in a deal arranged with demolition players in Pakistan.

Other sources suggest that the price was somewhat lower at about $705 per ldt.

In either case, market observers describe this as an “extraordinary” level. It is the highest scrapping price achieved by a capesize bulker since at least 1998, according to the VesselsValue deals data bank.

The Pakistan market is known to have been offering higher prices than rivals elsewhere in India and Bangladesh lately.

“Offer prices from recyclers of Pakistan are currently leading the price board in the subcontinent market as the shortage of stock in the yards has driven demand to secure tonnage available in the demolition market,” cash buyer Best Oasis said in a report on 8 April.

With container ships booming, no such vessel has been offered for demolition for several months.

Bulker owners have been very reluctant to shed tonnage as well, as active vessels achieve robust earnings in that shipping sector as well.

In a demolition market that has shrunk by a third year-on-year, bulkers have accounted for just 32% of the 4.4 million dwt of tonnage scrapped so far in 2022, according to latest Clarksons figures.

Local factors

The high prices achieved amid that dearth of available demolition candidates, however, has been increasingly drawing bulker owners to part with some of their oldest vessels.

The Sunbeam, which vessel trackers show anchored at the Bay of Bengal since 7 April, is owned by the Nicholas G Moundreas group of companies. According to TradeWinds figures, this makes it the first Greek-owned capesize to be sold for demolition since June last year.

Moundreas was the seller as well at the time, when its 170,100-dwt Win Win (built 2001) fetched $585 per ldt.

Other demolition deals reported this month confirm that the $700-per-ldt barrier is being assaulted in Pakistan.

The Chinese-managed 105,200-dwt aframax Ion (built 1998) has fetched $707 per ldt, US-based brokers said.

Somewhere on the Indian subcontinent, a $700-per-ldt scrapping deal is hatched for Union Maritime’s 72,700-dwt products tanker Hampstead (built 2004), according to the same sources.

Policymakers in Pakistan may have had a hand in forcing cash buyers’ hand and spurring prices to such levels. Amid a political crisis, a plummeting currency and a soaring import bill, authorities moved to impose a 100% cash margin on the importation of several steel products recently.

The measure doesn’t extend to ships yet, but demolition players in the country may worry that it eventually might.