Complications Still Hampering the Indian sub-continent Ship Recycling Markets

The ship recycling market is still facing complications. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as India celebrates the ‘Chandrayaan-3’ mission to the Moon, making space history being the first nation to land at the Moon’s South Pole, no such celebrations are paramount from the Alang recycling yards with local market sentiment remaining cautious. There is currently no serious demand of the finished products from the domestic rolling mills, hence the weaker price levels on offer. As such, one small step from Pakistan is evident, but this is no giant leap. A number of recyclers are returning to the market with reports of a few vessels being committed to this destination once again. However, some remain sceptical as to how the process of delivery will occur and how long it will take for the Letters of Credit to be opened on arrival to the official anchorage – time will tell in the forthcoming weeks if there are lengthy delays due to this financial situation. But whilst this is not a giant leap, some optimism is apparent, hopeful that competition to their counterparts will once again be seen as the Gadani destination is certainly required once the expected flow of tonnage gathers momentum. We are certainly witnessing more dry bulk tonnage circulating into the market, clearly evidencing the pressure that the current freight rates are under. With Bangladesh again facing financial issues, it is hoped that Pakistan can receive tonnage without any delays or further financing issues to take the burden off the Indian recyclers”, the shipbroker said.

In a separate note, Allied said that “despite the long list of vessels below, the market remains somewhat lackluster across Indian and Bangladesh on account of weak local steel prices. The attached sales demonstrate the continuing trend for yards in Bangladesh to acquire the majority of smaller vessels. It is also worth noting that many of these sales have only just come to light having arrived at yards, so this list should be taken as an indication of activity over recent weeks. In the cases of the ‘Jitra Bhum’ and the ‘Kama Bhum’, spares will have supported the price despite being a sale on an ‘as is’ basis.

On a brighter note, the sale for the ‘Yong Ning’ and ‘Gloria 1’ make for a punchy return to the market for Pakistani breakers, being two of the highest LDT sales of recent weeks. Tonnagestarved yards will likely be looking to make more deals, now that the ice has been broken and the first couple of L/Cs have come together. The competition-beating prices should help owners looking to offload vessels get on board with this too”.

Meanwhile, GMS, the world’s leading cash buyer of ships said that “the ongoing complications experienced in the Indian sub-continent ship recycling markets have shown few signs of dissipating this week, with a sudden increase in the unrelenting non-existent supply of vessels and sparse L/C / financing approvals in Bangladesh and Pakistan, which has seen market pricing that is reaching new lows with each concurrent sale into the sub-continent destinations. Notwithstanding, despite being moderately placed in the market rankings, India remains a beacon of hope amidst a dire 2023 recycling landscape, especially as a number of impressive deals were concluded here this week, perhaps suggesting that better days may well lie ahead for this market.

It is also reaching a point where various Owners and Cash Buyers are choosing to hold on to their unsold tonnage, rather than committing their units at these unexpected new lows of today that are consistently below USD 500/LT LDT – so unexpected have been the level of falls from over USD 600/LT LDT seen earlier this year. As such, only after various Cash Buyers have disposed of their inventory and a period of calm and stability has been witnessed across the sub-continent markets, may we start to look upwards, especially after all these months of negativity. Particularly, once the constant rains come to a halt, may we see production restart and the backlog of material at the yards starts to shift again. On the far-end, Turkey remains quiet as ever, with virtually no movement reported over recent weeks. Overall, following the glut of dry bulk sales over the summer months, it has overall been an odd mix in the supply of vessels as container units have started to re-emerge once again, especially as rates across these two sectors struggle to post any significant profit above running costs. As such, if prices do begin to pick up from these current lows and financing / LC issues start to ease up in both Pakistan and Bangladesh, we may hopefully expect a busier fourth quarter, in addition to some more urgency / aggression to the present lethargy being witnessed”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide