Is the Ship Recycling Market About to See More Activity?

The ship recycling market has been hampered by reduced activity for quite some time. However, shipping experts feel that the coming weeks could offer some respite. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “ss the days grow shorter now that the first of September has arrived, the engaging thoughts are whether this is the month which will see more supply of recycling candidates come into the market. We continue to see some of the vintage, Far Eastern controlled, dry bulk units coming for sale or arriving to the recycling shores having previously been sold off market.

Source: Clarkson Platou Hellas

According to Clarkson Platou Hellas, “following on from our report last week, Pakistan has jumped back into the arena and this week, a bulk carrier was sold delivery Pakistan for region USD 545/ldt, a significant increase on the last similar sale which was at USD 525.00 per ldt. However, some critics suggest this was a one-off price for a particular recycler who has a Letter of Credit readily available. Looking at the arrivals list to the Chattogram, Bangladesh, there seems to be several units arriving or waiting to deliver. There are still significant issues surrounding the domestic payment availability and therefore it will be interesting to see if these finally get beached on the local yards or, cash buyers lose patience and divert across to their counterparts. The Recycling volume, whilst on par with 2022 levels, remains notably down on a 10-year average but this certainly does not look set to continue and the oncoming winter months may see a turn of events with more supply arriving to the recycling yards. The questions, and concern, is can the Indian sub-Continent destinations improve their financial restrictions to cope for the eventual increase in supply?”, the shipbroker concluded.

In a separate report this week, GMS, the world’s leading cash buyer of ships said that “a glimmer of optimism seems to have been aroused in the sub-continent ship recycling markets this week, as several units were reportedly concluded to optimistically fervent Cash Buyers (at increasingly firmer levels) who are perhaps eager to book tonnage pre-Monsoon end, in order to potentially satiate some of the forthcoming increase in demand from the sub-continent markets once the traditionally busy year-end / Q4 kicks in. Several sales have reportedly been confirmed into Pakistan over the last month (a couple of units have even greeted Gadani’s waterfront this week), especially as L/C approvals are now (precariously) coming through for some of the tier-1 Recyclers in Gadani, where capacity and demand has been steadily fermenting for a better part of the year. India too has seen some positive spikes in domestic steel plate prices this week, and with next week’s G20 nations conference that is scheduled to meet in India, positive announcements on infrastructure projects / developments are expected to be announced that should further boost the country’s economy and global footprint.

Source: GMS

Indeed, global steel plate prices have firmed up by about 2% over this past week, reportedly off the back of Chinese measures to boost the housing market (lowering mortgage rates for the first time for domestic home buyers) and to support the Renminbi (the official currency of the People’s Republic of China). Only in Bangladesh have plate prices remained stranded / flatlined in the doldrums for yet another week, as no serious offers on vessels have emanated from local Recyclers as a result. Moreover, foreign currency / U.S. Dollar reserves are still struggling to being balanced by the powers that be (invariably leading to tougher limits to open L/Cs) and End Buyers who still believe they can secure bargain deals closer to USD 450/LDT (in vain, if we may add). The reality is that with India and Pakistani markets picking up again amidst some much-needed (and traditional) fourth quarter positivity flowing into the market, Bangladesh could be set for an extended spell on the sidelines whilst such poor offerings and sentiments persist locally. Finally, Turkey remains stable and unchanged since last week”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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