In an alert issued Monday morning analysts at RS Platou markets pointed out that 28 bulkers with a combined carrying capacity of roughly 2.13 million dwt were sold for recycling last month alone.
“Scrapping of dry-bulk vessels is picking up significantly and fewer owners are likely to order new vessels from ship yards, hence fleet growth is likely to slow significantly in coming years,” they added.
“This should result in improvements but the pace of recovery could take a while and in the meantime weak cash flows represent a material risk for companies with many vessels on the water and unfunded newbuilds on order.”
Amit Mehrotra, an analyst at Deutsche Bank, described the surge in scrapping as a “much needed first step on the road to recovery for dry-bulk” in a weekly client briefing.
On Monday the Manhattan-based forecaster argued that the uptick is reflection of lacklustre spot rates and age profile of the segment’s fleet.
Mehrotra pointed out that approximately 11% of the dry-bulk fleet is 21 years of age or older and noted 5.4% is 25-years-old or more.
