As scrapping for 2012 seems to hit the highest yearly record, this would help resume newbuilding ordering cycle.
Choi Kwang-Sik, LIG Investment & Securities said on April 23 that recently newbuilding price, second-hand price and charterage all are firm in tone, BDI staying at 1,067p.
He said that scrapping of old vessels would adjust balance between supply and demand. Considering those sold for scrap during the first quarter, bulkers 5.2% of overall tonnage, tankers 3.2% and boxships 1.6% are estimated to be sold for scrap in 2012.
Added, "Increase in scrapping would boost new order in 2012 by cushioning swelling fleet."
Analyst Lee Sok Je, Mirae Asset Securities said, "It is almost clear that small-and-medium vessels is getting closer to under-supply," as Hyundai Mipo Dockyard of South Korea contracted two PCTCs, four product carriers, eight LPG carriers, one bulker, etc in the past month.
Moreover, newbuildings on orderbook to active fleet ratio stand rather low, such as PC at 11.2%, while LPG carrier at 11.5%, RoRo at 8.3%, feeder boxship at 4.4%, etc. Also, considering delivery period of 2-3 years and scrapping now soaring, shortage of tonnage supply seems quite certain.
Although tight finance holds back contracting activity, other data seem to show ordering cycle is ready to resume, he added.