The surge in scrapping underscores how the sector is grappling with one of its worst crises. Picture: REUTERS/JEAN-PAUL PELISSSIER
The surge in scrapping underscores how the sector is grappling with one of its worst crises. Picture: REUTERS/JEAN-PAUL PELISSSIER

Singapore — The shipping industry will in 2018 scrap the largest number of oil tankers in over half-a-decade, driven by weak earnings, firm prices for scrap steel and the need to prepare fleets for new environmental laws.

The surge in scrapping underscores how the sector is grappling with one of its worst crises, hit hard after rates for transporting oil plunged to multiyear lows in the wake of excess tanker supply and tepid demand as Organisation of the Petroleum Exporting Countries production cuts bite.

"The tanker markets are in a trough at the moment, with one of the worst years in a decade in terms of freight rates and returns," said Ralph Leszczynski, head of research at ship broker Banchero Costa in Singapore.

About 10.3-million deadweight tonnes (DWT) have been sold for demolition from January to April, compared with 11.2-million DWT for 2017 and 2.5-million for 2016, said Erik Broekhuizen, tanker research and consulting head at ship broker Poten & Partners.

Reuters