Scrapping converted ships like Exxon Valdez seen curbing glut

Scrapping iron-ore carriers converted from obsolete oil tankers such as the Exxon Valdez is helping curb a glut of vessels, according to Clarkson Plc, the world’s largest shipbroker.

Five of the 70 ships, refitted to haul dry-bulk commodities after regulations phased out single-hull tankers, have been demolished and the others are likely to follow, Martin Stopford, president of the shipbroker’s research division, said June 14 on the company’s website. The Exxon Valdez — which became an iron-ore carrier in 2007, 18 years after causing the worst tanker spill in U.S. history — was sold for scrap in March 2012.

The 65 remaining converted carriers compare with a global fleet of 1,528 ships larger than 100,000 deadweight tons, called Capesizes, London-based Clarkson estimates. Capacity swelled 68 percent since 2009, more than double iron-ore trade growth, weighing on rates, its figures show. While the tankers were converted amid a shortage of ore ships, now they need to be scrapped to help curb the glut, according to Clarkson.

“Since these are now prime demolition candidates, today they are helping to balance the market,” Stopford said.