Scrapyards Will See More ‘Deadweight’ In 2016

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2016 – will be a busiest year for the scrapyards and not the shipyards. BIMCO predicts a total of 40 million dwt of bulkers will go to the scrapyard this year.

DWT scrapped year-wise:

2014– 14 million
2015– 30 million
2016 – in progress!

On the other side of the coin, BIMCO estimates that 50 million dwt are the expected newbuilds entering the market this year out of which 40% will be capesize bulkers.

Based on the Baltic Dry Index, it is the capesizes, which has the lowest day rates when compared to all others.  Though the BDI is falling every day, when looked at the orderbook, BIMCO forecast indicates a positive bulker fleet growth through 2017.

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 and Norden announced Thursday an expected loss of $340 million related to its dry bulk operations.

Source: BIMCO