Capesize Scrapping May Come Sooner Than Expected: MSI
12 July 2025 | By Maritime News Desk
A wave of Capesize bulk carrier scrapping could arrive sooner than the market anticipates, as mounting operational costs—particularly rising fuel prices—are making ageing tonnage increasingly uneconomical to operate. Maritime Strategies International (MSI), a leading shipping consultancy, has flagged Capesize vessels built between 2010 and 2012 as being especially vulnerable to early retirement.
In a recent market outlook, MSI revealed that vessels in this age bracket are reaching a critical point where rising fuel costs, declining efficiency, and increasing environmental compliance pressures could combine to shift the economic balance toward demolition.
Traditionally, Capesize bulkers—massive ships capable of carrying over 180,000 deadweight tonnes (dwt)—have enjoyed long operational lifespans, with many owners pushing vessels well past their 20th birthday. However, MSI’s analysis suggests that the cost-benefit equation is shifting, particularly for ships with older engine technologies that were not designed with fuel efficiency or decarbonization in mind.
“The economics of keeping older tonnage on the water are tightening,” MSI noted. “Even a moderate dip in earnings or a modest rise in fuel prices could make recycling an attractive option for owners.”
Heavy fuel oil (HFO), once the cheapest and most widely used fuel in the dry bulk sector, has become increasingly expensive and difficult to justify in the context of environmental regulations and shifting charterer expectations. Many older Capesizes are less compatible with newer, low-emission fuels or scrubber retrofits, further complicating their economic viability.
The 2010–2012 cohort of Capesize vessels represents a sizable portion of the global fleet. Delivered in the wake of the 2008–2009 shipping boom, many of these ships were built quickly and in large numbers as owners chased high rates. Now, those vessels are approaching 15 years of age—historically a milestone that prompts owners to reassess operational viability, especially under changing market conditions.
According to MSI, some of these vessels are already struggling to find premium employment opportunities due to inefficiency, lack of compliance with upcoming emissions standards, and higher operating costs. As environmental, social, and governance (ESG) pressures rise from both financiers and charterers, the commercial value of older, non-compliant tonnage is likely to fall further.
The dry bulk market has seen relatively stable earnings in 2025, but the outlook remains mixed. Although Chinese demand for iron ore has offered some support to Capesize rates, there are few guarantees this will continue into 2026. Should demand soften or fuel prices rise further, the incentive to recycle could increase rapidly.
“It’s not just about poor market conditions,” an MSI analyst explained. “Even in a neutral rate environment, higher fuel and compliance costs mean the margin for older vessels is getting slimmer.”
The idea of a large wave of dry bulk scrapping has been circulating for years but has yet to materialize in the volume some analysts predicted. The resilience of dry bulk earnings and relatively strong demand for tonnage have helped older ships stay afloat longer than expected.
However, MSI’s latest warning suggests that this tide may be about to turn.
“If owners face prolonged earnings pressure and escalating fuel costs, the economics could shift very quickly,” MSI said. “Scrapping decisions that once seemed premature may start to look pragmatic.”
While there is no immediate panic in the market, the warning signs are growing more prominent. Capesize owners with mid-life vessels face increasing pressure to weigh the costs of retrofitting and compliance against recycling values. If MSI’s calculations prove accurate, the long-awaited scrapping wave may soon move from forecast to reality.
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