Skip to comments.Trouble in shipping turns ocean into scrapheap
Posted on 04/09/2012 3:45:00 PM PDT by bruinbirdman
The downturn in shipping is hitting the industry so hard that some of the world's biggest vessels are now worth little more than their scrap value, new figures show.
Shipyards have been turning out new vessels at a pace designed to service global demand that has simply failed to materialise, meaning the industry is now sinking under massive overcapacity.
As owners have seen the rates charged to carry freight plunge, demand for their ships has collapsed to the point that selling them for scrap makes financial sense much earlier in a vessel's life.
In the worst hit sectors, the fall in the ships's value and the rise in the price of steel driven by rapacious demand from China as it builds itself anew means that the difference between the prices fetched if vessels are sold on to keep sailing and those if they are broken up for scrap is now minimal.
Cargo ships as a general rule are built to sail for 25 years, yet in the volatile VLCC or "very-large crude carrier" sector, which comprises the world's biggest oil tankers, scrap and resale prices reached parity in recent months for the average 15-year-old ship, according to prices tracked by industry information provider VesselsValue.com.
A typical 15-year-old VLCC achieved an average resale price of about $78m (£49m) at the peak of the market in July 2008, its research shows. That figure has since plunged to $23m.
Adrian Economakis, lead research analyst at VesselsValue.com, said that ship prices have in the main been heading in only one direction.
"There was a bit of a 'dead cat bounce' in the middle of 2010 when there was a small recovery but the general trend has been quite horribly downward," he said. "From the second half of 2010 to today, it has
(Excerpt) Read more at telegraph.co.uk ...
So does this meaning that my investment into the Baltic Dry Index futures is not worth squat?
Guess who will buy them on sale and then float them into our ports....?
Only if you were long.
Nobody will, our environmental rules make it nearly impossible to scrap a ship here. That business has also been chased out of the USA. When will we ever be relieved of these SOBs repub and dem that hate nothing worse than a blue collar job?
Without a doubt the 2010 uptick was in response to the Tea Party inspired elections and the hopes we would return to the great country of private enterprise and rule of law. It obviously takes more than one election cycle.
I saw a special on BBC World a few years ago about some place in 3rd world Asia where the ships are run aground and the locals are paid a few pounds each to go take it apart barehanded and basic tools.
It was depressing to watch even though most of those ships have had their day back then.
So a VLCC is carrying one million barrels of crude.
Cargo is worth four times the value of the ship.
Pretty soon they’ll just unload the crude, and melt the ship for scrap.
That’s how valuable crude is.
You can be forgiven for not recognizing my “artwork” as a mushroom cloud....
...but I wasn’t referring to scrapping.
I said “sale”.
I was referring to an enemy using them as a weapons platform against us.....
The Commies have not let up for 90 years.
Robert Welch was right. So was Joe McCarthy.
Kinda like Red Chinese shipping containers' one way trips?
They send us cheap junk, we should set up “disassembly yards” as exist in India and let people tear apart our ships to send back to China?
The Dead Cat bounced . . .but not very far.
We’ll all be living in shipping containers if Obama is re-elected. Better to invest in cheap white relocation homes now.
Yup.. here’s a good one I’m sure you’re familiar with.
So how about the world’s biggest “no-return” container?
That sure as heck looks like an aircraft carrier. I wonder which one? The tall mast makes the Argentine 25-de-Mayo or Brazilian Minas Gerais look like good candidates for the ship in that pic.
Pretty cheap dry dock fees, I see.
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