Decisions, Decisions, Stratospheric Scrap Prices:What’s An Owner to Do?

It’s a good time to own a ship that needs scrapping. With rates reaching $400 per ton, and in some cases even higher, the industry has never seen such high prices paid for scrap vessels. This increase in scrap prices is being driven by China, which needs steel for reinforcing bar (or rebar) to provide support for the concrete used in infrastructure projects such as buildings and bridges. Secondly, alternative steel is not being produced fast enough as coal and iron ore are also in high demand. And, with tanker earnings still at strong levels, owners of older tonnage want “one more voyage,” and need a significant scrap incentive to forego the earnings available on the spot market, thereby reducing available supply.