BIMCO: 40 Million DWT of Bulker Scrapping in 2016
BIMCO said Friday that it predicts a total of 40 million dwt of bulkers will go to the scrapyard this year. If the forecast should prove accurate, 2016 would be the busiest year for scrapping on record.
30 million dwt were scrapped last year, and 14 million in 2014.
However, countering the demolitions, BIMCO estimates that 50 million dwt of newbuilds will come on the market this year – and 40 percent will be Capesizes, which presently have the lowest day rates of all size classes.
The net increase of 10 million dwt is small compared to the base tonnage on the market, but it is still not a contraction in the supply of bulker capacity, which at the moment is well in excess of shipping demand.
BIMCO's forecast indicates positive bulker fleet growth through 2017 based on present orderbook.
The forecast of high demolition activity for this year will come as welcome news to bulk shipping, which has suffered a string of setbacks due to overcapacity in a slowing market, especially in China. The benchmark BDI index hit 354 on Friday, its lowest in history and a continuation of a two-week run of consecutive low records. BIMCO predicts that the first quarter of 2016 will be especially tough, with cyclically low demand for shipping and many newbuild deliveries (often scheduled for the first few months to maximize the “year-built” of the vessel).
Eagle Bulk Shipping announced Wednesday that it had lost access to a $10 million revolving credit facility after breaching a loan covenant. The firm had previously disclosed a breach of U.S. sanctions on Myanmar, and the lenders used this violation of covenant to cut off access to the line of credit. The firm reportedly wanted to use the line to service other debt, and without the credit, Eagle was forced to skip a payment of about $4 million.
Norden announced Thursday an expected loss of $340 million related to its dry bulk operations: a $180 million write-down on the value of its fleet, and $160 million in losses on long-term charters.