THE RELATIONSHIP BETWEEN FREIGHT RATES AND DEMOLITION PRICES

Maritime market has a derived demand structure, so a pickup in the world's economy will bring vitality to the market. Demolition prices in buoyant market are mainly affected by two factors: first, the demand for steel increases; second, the number of ships sent for demolition decreases because even old and obsolete ships can be profitably operated in good market conditions. So these two factors causes demolition prices to increase in parallel with freight rates. In this context aim of this study is to contribute existing limited literature by examining the relationship between shipping earnings and demolition prices at the macro level. Shipping earnings are represented by the Baltic Dry Index (BDI), and scrap prices are represented by India Demolition Prices. Correlation and regression analyzes are used as methods to determine the statistical relationships between the variables in the study. The result of both analyzes confirms the positive significant relationship between the variables