Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Ship scrapping volumes could rise in 2020 despite challenging operating environment due to COVID-19 pandemic, according to GMS Leadership, a company that buys ships for demolition.

As per the company’s statistics, 13.6mn dwt of vessels have been scrapped to date in 2020 and are likely to exceed 20.9mn dwt figure for the entire 2019. GMS trader, Vagelis Chatzigiannis, stated on July 16 that rise in demolition is certain but dependent on the freight markets which would impact the tonnage supplied to the scrapyard as low freight rates could prompt shipbreakers to bear losses and liquidate the ship to sustain for a short while.    

As the business operations resumed, the company started receiving capes, containerships and a lot of Very Large One Carriers (VLOCs) along with scrapping of many car carriers, ro-ros and offshore units like floating production, storage and offloading vessels. Tanker recycling volumes, however, have been low due to strong earnings, but more vessels from this sector are likely to be demolished in late 2020 or in early 2021, informed GMS CEO Anil Sharma. 

The company acknowledged the persisting challenges and difficulties of crew mobility amid ongoing COVID-19 crisis. South Asian shipbreakers continue to operate at reduced capacities due to labour shortage and return of crew is still challenging due to travel and visa restrictions across the globe.

Hong Kong had become a popular destination for vessel deliveries, but due to spike in COVID-19 cases, the country has imposed several restrictions. GMS cited that government impetus or monetary policies could further help the demolition industry tide over economic difficulties.   

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