Dry bulk shipowners are becoming increasingly interested in demolition market, as current scrap prices of more than $500 per ldt provide healthy returns on elderly tonnage.
Prices achieved can even allow some owners to walk away with cash that can be put down as a deposit on modern secondhand tonnage.
Today’s demolition prices are making a lot of sense for the owners of the bigger bulkers, such as capesizes and panamaxes.
An owner of a 20-year-old capesize bulker now has daily operating costs of $10,000 per day and he is faced with a decision to either invest another $3m-$4m in a special survey and face a market returning just $6,000 per day compared with the incentives for scrap which could see them achieve around $12m.
It’s a relatively simple decision and we’re seeing an increasing flood of bulk carriers being sold for scrap every week, with 7m tonnes sold for scrap so far this year compared with 6m tonnes in all of 2010.