Although a large amount of dry bulk vessels were scrapped during the first three months of this year, scrapping activity has become subdued recently due to the moderate firming in dry bulk spot chartering rates. During the first three months of this year, approximately 136 dry bulk vessels were scrapped. On a weekly basis, this comes out to an average of 10 vessels being scrapped during the first three months of the year. In the first three weeks of April, however, an average of only 5 dry bulk vessels have been scrapped each week.

By the end of this month, we expect April will have seen 20 to 25 dry bulk vessels scrapped. This would be well below the estimated 52 dry bulk vessels that were scrapped in March.

The recent increase in capesize and panamax rates, and firming in supramax and handysize rates, has been largely responsible for the decline in scrapping activity (steel scrap prices, on the other hand, have remained basically flat). Spot capesize rates are currently averaging $6,598/day, an increase of $1,410 (27%) from the end of March. Spot panamax rates are currently averaging $11,882/day, an increase of $3,484 (41%) from the end of March. In addition, spot supramax and handysize rates remain well above operating costs. Spot supramax rates now average $10,667/day, while spot handysize rates now average $8,482/day.

 

During the upcoming weeks, we anticipate that dry bulk vessel scrapping activity will remain at current subdued levels, as we expect dry bulk spot chartering rates will stay relatively firm.