MARKET: Why Don t OSVs Get Scrapped? aogdigital.com - get the latest breaking news, showbiz & celebrity photos, sport news & rumours, viral videos and top stories from aogdigital.com Daily Mail and Mail on Sunday newspapers.
Credit: MSI Credit: MSI
The OSV sector will be reliant on a hitherto unseen amount of scrapping to balance the market, writes Gregory Brown, Associate Director – Offshore, Maritime Strategies International
There is a consensus that an OSV market recovery will only be driven a supply side rationalization. As well as a lack of newbuild activity, that rationalization will have to include unprecedented levels of scrapping in a market which has historically witnessed only limited levels of attrition.
That limited level of attrition has several deep-seated roots, most notably weak scrap values, a fragmented supply chain, and low idle costs (~ $1,000/day). These fundamentals are unlikely to change. Scrap prices are likely to remain weak, the fleet will remain fragmented, and OSVs will continue to be unattractive for scrap yards.