China's introduction of a new scrapping subsidy regime in December has resulted in domestic cargo volumes increasing enough to offset 12 per cent lower trade demand from overseas down in the first quarter, according to Shipping Gazette.
Beijing's demolition policy allows carriers to receive CNY750 (US$120) per gross tonne for scrapping China-flagged ships at domestic shipyards until 2015.
This subsidy is doubled, if the shipping lines place newbuilding orders no smaller than the tonnage scrapped within China. Ship operators receive half the money upon scrapping and the remaining after placing a newbuilding order.
According to China National Shiprecycling Association (CNSA), its member yards scrapped 44.5 per cent at US$322 per ldt (light displacement ton) of containerships; 41.3 per cent of bulk carriers at CNY1,935 and (14.2 per cent) oil tankers at CNY1,983.
Half the ships scrapped were both foreign and domestic flagged ships aged 20 years or younger, reported Lloyds List. One third of domestic ships were made in China.
Compared to the Indian subcontinent, Chinese yards from January to April were $100 per ldt lower due to declining demand and less scrappings, according to Baltic Exchange data.
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