The ship recycling market has come back to life over the past few days, as a result of more container candidates entering the market. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as we enter the summer period (where’s the sun) and the end of the Eid celebrations, the market has sprung into life again with a cluster of new container units circulating for sale from various well-established liner companies. Buying activity has also ramped up on the back of a potential continuous flow of tonnage following a somewhat barren period, however we are hearing of weaker domestic steel markets which may affect sentiment from the waterfront. In particular, reports suggest the Indian steel market has weakened this week which may hamper any bounce back on price levels offered from the cash buyers. This is also coupled with the monsoon season, which is around the corner, where maybe the quieter market will continue for the foreseeable future”.
In a separate note this week, Allied Shipbroking added that “the vessels appearing on Bangladeshi shores are an indicator that the brief period where dollar restrictions began to ease, was not signaling the end of the financial difficulties faced there. Vessels that have just arrived in Bangladesh all have low LDT and are in sharp contrast to the 9,000-12,000 LDT vessels that have been sold in the US$ 500s /LDT ranges to Indian breakers (although there have not been any new arrivals to Alang).
After successfully competing for vessels for HKC recycling, and several new yards receiving green certification, Bangladeshi yards have failed to attract such vessels for a second week in a row – yet another symptom of the reversal of economic fortune there. The global steel outlook remains mixed and uncertain, and the sharp drop in Chinese steel prices last week is only going to add downward pressure on domestic prices in ship recycling destinations. This could increase the likelihood of a drop in prices offered for fresh tonnage and could contribute to a restriction in the supply of tonnage in the near term if vessel earnings remain at or above current levels”.
Meanwhile, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said in its latest weekly report, that “several sales have taken place into India for HKC restricted yards / green recycling only, as end Buyers seek to fill empty recycling plots, especially after a quieter period during Ramadan / Eid holidays across the sub-continent & Turkey, when minimal-to-no deals were concluded at the various destinations. As the holiday period concludes, ever optimistic industry players are still hopeful that they may see an increase in the number of recycling candidates, as demand in Bangladesh, India, and even Turkey, ramps up again. Notwithstanding, rates have taken somewhat of a battering off the back of declining steel plate prices & volatile currencies, and as stated in last week’s edition of the GMS WEEKLY, it is becoming increasingly difficulty to get vessels delivered into Bangladesh and Pakistan, with all parties waiting on Central Bank approvals for Letters of Credit (L/Cs) to open.
Indeed, Sellers and Cash Buyers should budget for at least two tides to get vessels delivered, particularly for larger LDT & large U.S. Dollar value vessels, where these approvals are taking longer than expected to come through. On the other end of the sub-continent, Pakistan remains largely absent from the buying due to unworkable bank limits / restrictions on the expenditure of dwindling U.S. Dollar reserves, in addition to uncompetitive pricing on units that has subsequently placed them a long way at the bottom of the sub-continent demo rankings. At the far end, Turkey remains worse on the fundamentals front of than last week, as their dithering numbers place an incredible downward pressure on vessel prices. Overall, due to an uptick in both dry bulk and container charter rates at the start of this year, there has been a relative slowdown in the number of available recycling candidates. However, we have witnessed a slight increase in the inflow of (HKC) tonnage over these last couple of weeks as markets level off, and India has been the chief beneficiary of this over these units”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide