Scope of this thesis is to better understand the demolition market. That's why this thesis sets several questions and tried to thoroughly answer them. At first it wrote down the factors that drive the supply and demand side and finally set the equilibrium in the market. However apart from the economical description of the demolition market, the everyday business is also to be explained. For example what are the options the ship owner has when he decides to have his vessel demolished? What are the common practices followed by those participating in the market? Following the data collected by the Clarkson's Intelligence Network it was evident that demolition market is dominated by Asian countries (India, Pakistan, Bangladesh and China). Which are the main reasons that offer the advantage to Asian ship breaking yards compared to these in western economies (UK, USA, Germany etc.)? However, since there are several environmental and human casualties due to ship breaking industry, why dominant Asian countries give many incentives in order to further develop this industry? Ship breaking countries gain many economic benefits from the demolition market and several domestic markets dependent to the ship breaking are appeared. Furthermore from all the Asian countries which are these that dominate the demolition market? When did China, India or Bangladesh enter the market? Which country is more favorable for tankers' or bulk carriers' demolition? Which countries are more competitive in terms of scrap prices? Next it presents the variables that affect the probability of scrapping and their effect on the major ship breaking countries (India, China, Bangladesh and Pakistan). Finally it collected several data of the years 2000-2009 in order to examine the correlation between the world merchandise trade on one hand and the demolition and freight market on the other hand.