The ship recycling market has seen limited activity for a number of weeks, as more and more old ships remain active, instead of being sold for scrap. The uncertainty regarding future “green” technologies and limited newbuilding deliveries are contributing factors to the above trend.
In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with another lacklustre week in the ship recycling industry, at least the world of sport is this week throwing up many different events: the Ashes, Formula 1 racing, the Women’s Football World Cup and the British Golf Open Championship, to entertain and divert the boredom away from the market place. Price levels are reportedly falling further in India on the back of the monsoon season hampering the destination and also, the weakened domestic steel market. Interestingly, there are also rumours of several vessels being re-routed from Chattogram towards India due to ongoing Letter of Credit restrictions and once again, it would appear financing in Bangladesh is difficult for tonnage over 10,000 ldt. With Pakistan remaining absent from the bidding table, there really is a sense of concern during these summer months as to where the available tonnage can be concluded to and perhaps, the shortage of tonnage at this current time is a blessing in disguise”, the shipbroker said.
Source: Clarkson Platou Hellas
Meanwhile, in a separate note this week, GMS, said that “prices continue to struggle across all of the major ship recycling markets, as Bangladesh further declined off of the back of depreciating currencies and sustained L/C struggles, while Turkey suffered similarly with declining steel plate prices, the Lira, and finally, its vessel prices. The supply of tonnage seems to have increased just slightly over the last couple of weeks (particularly from the Chinese market) and as such, many Owners and Cash Buyers have been left chasing down various recycling destinations amidst weakening prices”.
According to GMS, “as forecasted a few weeks ago, Pakistan finally seems ready to return into the game and has even overtaken an extremely lackluster Indian market wherefrom, lowball offers of below USD 500/LDT seem to be coming regularly in, with little success for all parties involved. As such, it may take some time to work through the L/C issues in Pakistan, but it is certainly encouraging to see various offers come back close to currently competitive levels. On the supply side, it has mostly been vessels from the Dry Bulk sector that continue to be introduced to the recycling markets, especially older Panamax and Handy units built in the 90s that are perhaps overdue for retirement from their respective fleets.
Source: GMS
Post budget in Bangladesh has certainly been more difficult to get Central Bank approval on fresh L/Cs, but things seem to have eased up a touch this week as local Buyers are emerging once again, just as the tonnage flow is also increasing. Finally, the Turkish market seems to have taken a turn for the worst, as import and local steel prices, the Currency, and even vessel prices have all taken a tumble during this week, with some vessel indications reportedly coming in even below USD 300/MT. Overall, it will certainly take some time to absorb many of the unsold vessels not only being freshly proposed into the markets, but also those units in Cash Buyer hands and as such, sentiments and demand may remain somewhat muted for some time – at least until the monsoons start to subside”, GMS concluded.
