Ship demolition: 301 tankers sold for scrap in 2021

2021 saw 704 vessels sold for scrap overall, with a combined deadweight tonnage of 26.4 million and a total scrap value of $2.7 billion, a report released by VesselsValue shows.

Scrapyards have stayed busy with the total number of vessels sent for demolition climbing by 20 percent since 2020, and 26 percent since 2019, when 583 and 558 vessels were scrapped respectively.

The demolition markets of 2021 were characterised by many of the same factors impacting shipping as a whole — a boom in bulker rates and values, record-breaking growth in the containership sector, and a static tanker market. 

Tankers

Tankers dominated the demolition market in 2021 with 301 vessels sold for scrap, accounting for 59 percent of all cargo vessels demolished, VesselsValue revealed.

“The surge in tanker scrapping represents a remarkable 242% increase from 2020, when a mere 88 Tanker demolition deals were closed,” VesselsValue said.

As explained, static spot and time charter rates have led to shipowners sending a large amount of older tonnage to the scrapyard, with many perhaps running out of patience awaiting a tanker recovery.

Of the 301 tankers scrapped, 112 were delivered to Bangladesh, 84 to India, and 60 to Pakistan. The breaking yards of Aliaga, Turkey, demolished 12 vessels in 2021, a striking increase from 2020, when only 1 vessel was scrapped.

Over half (55%) of all tankers scrapped in 2021 were small tankers, totalling 166 vessels. Handy tankers and Aframax vessels comprised the largest portion of the remaining tonnage, at 59 and 33 vessels respectively, accounting for 11% and 20%. The final 14% is made up of 11 VLCCs, 17 Suezmax, 13 Panamax and 2 Post Panamax.

Bulkers

The comparatively low number of bulkers scrapped last year, at 59 vessels, comprised 11% of the scrapped fleet.

Bulker demolition sales were down from 132 vessels in 2021, a decrease of 55% due to the 10 year highs seen previously in the charter market throughout 2021, which saw owners capitalising on the unprecedented rates.

In this sector, Handymaxes saw the highest number of vessels scrapped at 18, accounting for 30% of the total bulker fleet. 15 Capesize vessels were scrapped (25%) and 14 Handy bulkers (24%). At 32 vessels, just over half (54%) of bulkers were delivered to Bangladeshi yards.

With bulker rates softening since the autumn of 2021 and EEXI regulation soon to come into force, we are likely to see an increase in the number of bulkers sold for demolition in 2022 as owners are encouraged to offload smaller, older and less efficient vessels, VV predicts.

Containerships

The most impressive decline in scrapping numbers came from the containership market, which saw an 87% reduction in scrapped vessels, from 83 vessels in 2020 to 11 in 2021. With rates during 2021 at historic highs, the low scrapping numbers for this vessel type are hardly surprising, according to VV.

The containership sector was dominated by Feedermax vessels, which accounted for 8 out of the 11 containerships sold for scrap (72%). The remaining 3 vessels were 2 Handy containers and 1 Sub Panamax.

Smaller vessels comprising a large portion of container demolition is a trend that continues from 2019 and 2020. In both these years, Feedermax and Handy containers accounted for a similar proportion of boxship demolition deals — 70% in 2019 (62 vessels) and 71% in 2020 (59 vessels).