(Bloomberg) — Owners of oil tankers must scrap younger vessels for the market to recover by 2014 or 2015, according to shipbroker Braemar Seascope Ltd.
The Baltic Dirty Tanker Index, a measure of crude-shipping costs, may reach 1,200 by 2014 or 2015 if owners demolish 15- year-old vessels, Mark Williams, research director at Braemar, said today at the Seatrade Tanker Industry Conference in Copenhagen. The gauge last touched that level in January 2010, according to the Baltic Exchange, which assesses freight rates.
“It seems dramatic, but it’s already happening,” Williams said of the demolitions. The index rose 0.6 percent to 680 yesterday, figures from the London-based exchange showed.
With world oil consumption growing 1 or 2 percent a year, the tanker industry needs to accelerate scrapping to end its slump after owners ordered too many vessels before the global recession, according to Williams. Earnings for tankers hauling refined products won’t recover next year either, he said.
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