Record ships may be scrapped in '07

The number of chemical tankers being sold as scrap metal may climb to a record this year, as owners withdraw ageing, banned carriers from service, Lorentzen & Stemoco, an Oslo-based commodities and shipping analysts, said.

Vessels with a combined carrying capacity of about 1 million tonne have been sold so far this year to scrap merchants in Bangladesh, China and India, already more than half the last two years' level, analyst Lianghui Xia wrote in a report today. Single-hulled chemical carriers were banned from service in January.

"The scrapping potential is huge,'' Xia wrote, adding that vessels with carrying capacity of 10 million tonne, up to one-fifth of the fleet, may go to the breakers' beaches this year. "Even if only half of that is sent to scrap yards, it could still tighten the fleet supply greatly.''

Demolition of ageing carriers cuts supply and buoys ship-hire rates. Odfjell ASA, the world's biggest operator of chemical ships, said on February 2 that the removal of ageing "commercially obsolete'' carriers from the fleet will boost its net earnings from the vessels through 2007. Odfjell only has two-hulled ships.

Modern oil and chemical tankers are fitted with two hulls to prevent pollution in the event of an accident. Single-hulled chemical ships are being banned starting this year with a similar oil-tanker ban coming into force starting in 2010.

According to Lloyd's Register-Fairplay, there are about 2,100 tankers in service that could haul chemicals with a total carrying capacity of about 50 million tonne.