Authors: Andreas Merikas, Anna Merika, Anil Sharma

Title: Exploring Price Formation in the Global Ship Demolition Market

Abstract

Using monthly time series data between 2004-2014 we develop ECMs (Error Correction Models) in three distinct but interrelated ship demolition markets, the tanker market, the product market and the dry bulk. In all three cases we find that the scrap value primarily leads together with the Chinese growth rate, the exchange rate and an index reflecting ship profitability. We show that these four determinants jointly provide the signal for price formation in the ship demolition market.