JAPAN'S Ministry of Transport (MOT) has predicted that the volume of ships to be scrapped will peak at about 22 million gross tonnes in 2000. Tankers are expected to account for about 15 million tonnes and bulk carriers about seven million. The main factor behind the high forecast for tankers is that a large number of very large crude carriers built in the mid-'70s will reach the age of 25 around 2000. The study was undertaken by MOT's Maritime Transport Bureau in fiscal 1992 and 1993 with the co-operation of the Japan Maritime Research Institute. In the first year, the volume of scrapping by ship age, and forecast models for the scrapping volume, were surveyed and researched. The bureau's forecast, up to 2005 for the world's merchant fleet, was an estimated 441 million tonnes including 143 million tonnes of tankers and 137 million tonnes of bulk carriers. According to the report, the world's annual ship-breaking capacity will stand at a minimum of 14 million tonnes and a maximum of about 26 million tonnes in the second half of the '90s. If the capacity turns out to be between the intermediate value of these forecasts and the maximum figure, it will be sufficient to meet peak needs. However, if the capacity remains between the intermediate value and the minimum figure, a shortage of capacity will develop in the peak period. In addition, even if the capacity turns out to be at the higher level, a temporary shortage can be expected if scrapping demands concentrate in a limited period. As ship ages increase, the incidence of marine accidents will also rise, the report warns. The prolonged presence of superannuated vessels will contribute to stagnation in the shipping market. ''It is therefore necessary to promote ship scrapping from the viewpoints of both navigational safety and the market situation,'' it says. However, the report notes that because of the possibility of ship-breaking capacity shortage, it is essential to equalise annual scrapping volumes through the partial hastening of ship-breaking. The ship scrapping market is basically a free market in which shipowners do business with ship-breakers. But the fact that ship-breakers are mostly medium and small businesses in developing countries, their limited fund-raising capacity constitutes a factor which greatly influences the prices of ships for scrapping and the volume of ship-breaking demands. When disposing of over-age vessels, shipowners have three choices: lay-up, sell for continued operation, or sell for scrapping. A decision is made after taking into account the intentions of charterers, the presence of new contracts, the shipping market situation and the trends in the used ship market. A comparison of profits from the different disposal methods indicates that ship-breaking cannot make progress because the prices of ships sold for continued operation exceed those of vessels sold for scrapping.