Ship Recycling Market Not Likely to Grow in Activity

The lower pricing environment and a lack of interest isn’t expected to move the needle in the ship recycling market, at least not anytime soon. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “holidays in the Far East have limited activity to some extent, as the number of candidates diminished further. Whilst we still see the majority of recyclers from both Bangladesh and Pakistan remaining on the sidelines, we have unfortunately witnessed daily falls on the domestic steel markets in India resulting in some cautious approach to be adopted. Next week will see the annual Tradewinds Ship Recycling Conference take place where over 250 delegates are expected to descend on Singapore to discuss new, and old, topics. We have seen in the past a spike in rates on the back of buyers willing to conclude sales whilst in the environment, however this year we are not expecting any such increase in levels due to the low volume of tonnage availability and fluctuating steel/currency markets. In addition, we have seen the dry freight market increase recently, which will likely curtail any units from this sector to hit the market in the near future”.

In a separate note this week, GMS, the world’s leading cash buyer of ships said that “after a dire summer that saw over USD 100/LDT wiped off vessel recycling prices in the Indian sub-continent ship recycling markets (and even Turkey to an extent), nearly all of the markets have enjoyed somewhat of an upward resurgence entering the fourth quarter of the year”.

GMS said that “India has been the primary beneficiary of this recent resurgence with some stunning (container) purchases, some even approaching the USD 600/LDT mark once again. As China too entered a holiday period, Indian local steel plate prices were the only ones to have traded this week and even gain marginal ground, all while the Indian Rupee remained relatively steady against the U.S. Dollar. Demand from Alang Buyers also remains rampant pursuant to a successful G20 summit and the announcement of various infrastructure projects. It is therefore unsurprising to see most of the tonnage head towards Alang, which remains the market of the moment with the top payers / players / performers and has been the most reliable destination for transacting L/Cs of all sub-continent markets”.

Meanwhile, “Pakistan has certainly come back into the picture of late and several End Buyers have even managed to secure L/C approvals to purchase 5 – 6 (mostly Panamax sized) Bulkers. With those vessels successfully beached, Gadani subsequently endured a slight dip and cooling of local demand as bank restrictions resumed. However, as L/C approvals seemingly start to filter through once again, we can expect sales to take place into Pakistan before the year is out. Bangladesh has been the great disappointment of late, as prices tumbled uncontrollably during the summer / monsoon months and the Chattogram market has yet to fully recover. Indeed, LC approvals are struggling once again as steel plate prices remain stranded well behind their competitors, to the extent that the BSBRA has had to temporarily halt the sale of inventory from local yards to domestic steel mills, in order to prevent underselling at these loss-making levels. Overall, the supply of tonnage has primarily been Containers over the last month, but as Dry Bulk vessels continue to trade at less than impressive rates, we have witnessed a steady introduction of vintage Handy and Panamax Bulkers, with Capes seeming set to come as well”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide