In a report by Charles R. Weber today, the shipbroker notes that the crude tanker market could be set for another 18 months of poor performance as ship demolitions are projected to be greatly outpaced by new ship deliveries throughout the rest of this year. They note that demolitions between January and May 2013 totalled 2.9 million deadweight tons, the lowest levels since 2009. In comparison, during this same period last year, Weber notes that 5.9 million deadweight tons were demo’d.
“Given prevailing trends in the tanker demolition market, we project a total of 6.0 million deadweight tons to be phased out through demolition sales through 2013,” notes Charles R. Weber. “This implies that total capacity demolished will offset 22 percent of the 27.5 million deadweight tons projected to enter service.”
Charles R. Weber’s projections come with a caveat however. They note that as tanker owners continue to report poor earnings over the coming quarters and as maintenance and operational costs grow for older tonnage, the slow demolition trend could reverse by the end of this year “even in the absence of an uptick in demolition values.”