The critical for the limiting of tonnage supply demolition activity seems to be slowing down.
In today"s adverse shipping market conditions, the critical for the limiting of tonnage supply demolition activity seems to be slowing down after a scrapping ?frenzy? from November and until today. With the global economy at its knees, shipping must rely at its own strengths for some time, in order to see itself through without many casualties. That said, all involved parties are doing what"s necessary to take tonnage off the market, whether that"s done by ship lay-ups, new building cancellations or the scrapping of older tonnage.
But, as the market managed to cover some of its losses, posting a small rally from the beginning of the year, some owners appear reluctant to keep the current of ships headed for demolition. In fact market sources indicated that as the ships were heading towards scrap yards, some owners were actually turning them around and back into the market, buoyed by the positive market sentiment. As a result the wave of scrap deals seems to be diminishing. Nevertheless, an important progress has been made in that field. According to figures compiled by Drewry Shipping, global dry bulk scrapping activity amounted at 2.485 million dwt of capacity during January. That"s the highest monthly number from at least 2006. It surpassed a previous record set in November of 2008 when more than 2 million of deadweight tonnage was sold for scrap.
The slight fall in scrapping activity observed during the past couple of weeks isn"t necessarily a bad thing, as some scrap yards are already appearing stagnated and will need some time to absorb all this sudden hike of activity. According to George Moundreas" weekly report, the flow of tonnage sold for scrap during the previous week amounted at 207,000-dwt for dry bulk carriers and 128,000-dwt for general cargo vessels, which is about 40% of the weekly average of the previous months and 50% for bulkers and general cargo respectively.
Meanwhile, prices seem to be picking up, at least throughout the Indian sub-continent.
Bangladesh is leading the way both for wet and dry tonnage and outperforming India and Pakistan. For tankers Bangladesh is paying around US$ 315 per ton, some US$ 15-25 over India and Pakistan respectively. For dry bulkers Bangladesh is at around US$ 275 per ton slightly higher than the US$ 265-270 being paid in India.