News / Scrapyards ready for another containership recycling boom

The container fleet is on a scrapping cliff edge, according to Alphaliner.

Last year, demolition sales fell to their lowest levels since 2005, but the industry is soon likely to see a repeat of the post-2008 financial crash scrapping boom.

With a deluge of 2.4m teu of new tonnage onto an already-worsening market, Alphaliner expects a “skyrocketing” of scrapping this year to hit 350,000 teu – comparable with the 377,631 teu seen a year after the financial crisis.

“[Last year] demolition prices remained at some of their highest levels seen in the past decade,” said Alphaliner, noting that prices have stayed robust into the beginning of 2023.

“These attractive figures were, however, not good enough for containership owners that almost entirely ignored the recycling scene, bar the few sales concluded at the end of the year.”

However, the consultant expects Europe-based owners and operators to see less return from recycling vessels, with scrap steel prices peaking around $700 per light-displacement ton (LDT) throughout the Indian subcontinent during Q2 22, compared with around $450 in Turkey.

“Recyclers hope for a much larger volume of demolition candidates in 2023 due to a weaker charter market and the looming overcapacity,” said Alphaliner’s latest report.

Only six vessels, for a combined 10,904 teu, were scrapped last year, following the already low level of 16,500 teu in 2021. Apart from the ancient ro-ro vessel Matsonia, built in 1973, the scrapping market was quiet until September, when two sub-1,300 teu containerships, 1990-built Mathu Bhum and sistership Xetha Bhum, were sold for recycling in Bangladesh.

In the three years before the pandemic – in a market that was neither boom nor bust – scrapped container vessel capacity hovered between 100,000 and 300,000 teu.