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Shipping update-I: Now is the time to dispose off old units
Aug 11: Current spot market returns have fallen in the shipping market and are and are unlikely to rebound in a significant manner in the near term, argues one analysis.
8The solution to low rates is already in front of ship owners, scrapping of older ships.
8Low earnings do encourage recycling as owners are struggling to make OPEX level returns in most tanker markets.
8There is now hope those looking at disposing of vintage units as steel prices in China are rising, which is driving up the $/ton cost for scrap buyers in India.
8A 105kt Aframax tanker may have a lightweight of about 18kt, which is used to determine the scrap value of a ship.
8The value that can be realized for a ship has increased from $4.75mn USD to over $7mn USD.
8This is not a trivial amount for someone looking at losing $7k/day in today's market with a 20 year old ship.
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