BIMCO: Dry Bulk Demos Will Ease Despite Record Start to 2015

The monthly scrapping average for H1 2015 is 3.3m DWT, a significant increase on the 1.33m DWT per month averaged in the period for 2014

Despite a record start to the year for dry bulk demolitions, market conditions should improve enough for 2015 to fall short of being a record year as a whole, BIMCO predicts.

April 2015 was the highest month on record for bulker scrapping in a single month with 5.36 million DWT being retired from active service, according to BIMCO.

It follows a record first quarter for bulker scrapping, with data from VesselsValue.com indicating 8.89 million DWT left the world fleet.

BIMCO puts the monthly scrapping average for H1 2015 at 3.3 million DWT, a significant increase on the 1.33 million DWT per month averaged in the period for 2014, and even higher than the 2.79 million DWT per month averaged in 2012 - currently the largest demolition year on record which saw the scrapping of 33.4 million DWT of tonnage.

2015 year-to-date scrapping is also higher than the same six-month period for 2012, at 20 million DWT compared to 18 million DWT respectively.

This, coupled with a deteriorating market and reports as recently as last month suggesting "at least 2 and a half years of pain" for the sector, the outlook for dry bulk remains grim.

Nevertheless, BIMO says operators have reason to be optimistic.

"As the year progresses, BIMCO expects the demand side to get stronger in connecting with rising volumes. This should positively impact the market conditions but at the same time also limit the demolition activity," said Peter Sand, Chief Shipping Analyst, BIMCO.

"In line with our recent adjustment of expectations for demolition activity in 2015, we do not see a new record year in spite of the strong start of the year."

On Thursday Ship & Bunker reported that the top players differ in their scrapping activity when looking at the types of bulkers being sold off.