The shipping industry will scrap the largest number of oil tankers this year. This amount of scrapping constitutes a seven-year high record. This will be caused by weak earnings, and the need to prepare for the new stricter environmental regulations.
The increase in scrapping shows that the sector is dealing with a big crisis, after rates for transporting oil reported a multi-year low. The difficult operating conditions will continue until the second-half of 2019.
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Moreover, after Reuters spoke to four shipping analysts, it said that their opinions vary, but the most conservative ones says that we will see a seven-year high in 2018.
Namely, almost 10.3 million deadweight tonnes have been sold for demolition from January to April, in comparison to the 11.2 million DWT for 2017 and 2.5 million for 2016. The stricter environmental regulations that will come into force in 2020 by the IMO.
In addition, another fact is that the ships that are being scrapped are getting younger, with the average age being 19.5 years, compared with 22 years in 2017.
Most of the vessels are scrapped in Bangladesh and India. However, Pakistan returned to the demolition market after it had been banned for 18 months.
