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2020 low sulphur fuel rule to send flood of aging ships to scrap yards

THE containership demolition market is on course to rebound this year amid a flurry of activity to scrap polluting older vessels in their fleets ahead of the International Maritime Organisation's (IMO) new 0

2020 low sulphur fuel rule to send flood of aging ships to scrap yards

THE containership demolition market is on course to rebound this year amid a flurry of activity to scrap polluting older vessels in their fleets ahead of the International Maritime Organisation's (IMO) new 0

24 January 2019 - 19:00

THE containership demolition market is on course to rebound this year amid a flurry of activity to scrap polluting older vessels in their fleets ahead of the International Maritime Organisation's (IMO) new 0.5 per cent sulphur fuel cap that comes into effect at the beginning of 2020.

According to London shipbroker Braemar ACM, 10 containerships have been scrapped so far this year, up from just one at the same time last year. Only 54 box ships were sent to scrap yards in 2018.



Rising charter hire rates, resulting from strengthening demand, persuaded owners to delay their plans to recycle their ships and instead reactivate idled tonnage, reports London's Loadstar.



This was no more evident than in the 4,000 - to 5,300 TEU range where hire rates doubled to US$10,000 per day.



Alphaliner data shows 20 idle panamax vessels seeking employment, with some 12 ships likely to join this redundant fleet within the next month as their charter parties expire.



Come 2020, vessels that use bunker fuel with a higher sulphur concentration than 0.5 per cent will be required to install a scrubber system to refine the less expensive heavy fuel oil (HFO).



Most analysts predict that the difference between HFO and the new low sulphur fuel oil (LSFO) will be $200 per ton.



In theory, shipowners could recoup the cost of their investment in scrubbers within a few years, depending on the size of ship and its trading pattern. The cost of installing the onboard refining systems is some $10 million a unit.



Evergreen, which has the largest orderbook in the sector, is one of the container lines that is favouring scrubbers, having recently sold the 5,364-TEU Ultra and 1,164-TEU Ever Able for scrap. The carrier currently has a further two 5,364-TEU ships and another 1,164-TEU vessel inviting offers in the demolition market.



Prior to its sale, vesselsvalue.com put the asset value of the 1996-built Ever Ultra on a par with its scrap value at $10.5 million.


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