| OSLO, March 6
OSLO, March 6 New ship deliveries in the
depressed dry bulk market will be below expectations this year
and vessel scrapping will remain high, providing the sector some
relief, shipping executives said on Wednesday.
Many of the ship orders on the books are unlikely to be
fulfilled because either the operator or the ship builder is
defunct or close to it, the executives said, adding extremely
low charter rates would squeeze more ships from the market.
"About 10 percent of the order book is rubbish," Lasse
Kristoffersen, the Chief Executive of ship owners and operators
Torvald Klaveness Group told a conference.
The dry bulk sector has been in a deep depression for years
and ships being launched now were ordered during the boom years
before the global financial crisis.
Firms are struggling just to survive as spot charter rates
are below $5,000 per day for the large, capesize class ships,
well below break even levels and just a fraction of rates in
excess of $100,000 a day in 2007 and 2008.
The global fleet is scheduled to grow by over 100 million
deadweight tonnes (dwt) this year, well over 10 percent, but
Kristoffersen predicted that the actual figure would be closer
to 65-70 million dwt.
"With scrapping included, our projection is for a net
increase of just 35 million tonnes (dwt)," Konstantinos
Adamopoulos, the chief financial officer of Safe Bulkers
That is below some market expectations with Morgan Stanley
predicting the fleet to rise by 63 million tonnes or exactly 10
percent, and for the utilization rate to fall to 74 percent from
"Based on (low) January figures, we think non-deliveries
this year could be dramatically higher," Ted Petrone, the
President of operators Navios Corporation said.
In 2012, around 34 million tonnes were scrapped, or 5.5
percent of the entire fleet, the highest rate in decades, said
Norwegian bank DNB, one of the biggest global shipping lenders.
"It's good if we have rates this low for the next 6-9 months
because it'll push for more scrapping," Herman Billung, the CEO
of Golden Ocean said.
Executives estimated that around 90 million dwt of capacity
was older than 20 years and thus ripe for immediate scrapping.
And while new orders peaked in excess of 170 million dwt in
2007, they fell as low as 20 million dwt last year, DNB said.
"If you believe the demand side, late 2013 or 2014 could be
the turning point for the industry," Kristoffersen added.