Ship Recycling Market Solidifies Slow Activity and Lack of Tonnage

The ship recycling market hasn’t shown any signs of change over the past week, as slow activity amid a lack of tonnage, seems to be the norm these days. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “there is no change to the rhythmic pattern experienced over many weeks from the regular reporting of slow activity, lack of tonnage, etc as the Eid Al-Adha festivities that are taking place this week have created even quieter market conditions. Despite the odd trickle of container units rippling into the market, which is evidenced by the sale reported below, this lack of available tonnage certainly looks set to continue for the next few months whilst Owners focus their attention on their summer holidays. One positive news generates around the entry into force of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC). With Bangladesh, and thereafter, Liberia, ratifying the Convention, we must now wait for 24 months under the IMO regulations (after the entry comes into force) that the HKC will become maritime law. A truly momentous occasion!”, the shipbroker said.

In a similar note, shipbroker Allied Shipbroking added that it was “an unremarkable week in which recent trends continued, namely limited available tonnage which heads to Bangladesh excepting container vessels for HKC recycling in India. MSC has disposed of its ninth vessel so far this year with the sale of the ‘MSC Federica’ heading for HKC recycling in India, as has been the case for the other vessels.

The price achieved was a little more than US$ 10/ldt lower than what was achieved with its previous sale towards the beginning of June. Following the recent positive steps surrounding the HKC convention, more good news could be on the way as IMF support for Pakistan moves forward after several months of silence with regards to the support that the country might receive. The nation’s dollar reserves remain critically low, but the IMF arrangements are set to tackle the import-export imbalance and improve the functioning of the FX market. This could be the first step of the long journey towards Pakistan becoming a competitive recycling market again”.

Meanwhile, GMS, the world’s leading cash buyer of ships said that “ongoing Eid holidays and a serious lack of tonnage have meant a much quieter week in the ship-recycling industry, as the ongoing lull (in terms of new sales and activity) firmly descends across the markets. Therefore, any price ideas that are still forthcoming remain noticeably below the market and not worth considering at this time and until we see liquidity issues ease in the industry, we are not likely to make much sense out of local markets. Instead, the industry continues to move ahead with other improvements, such as the historical news from Bangladesh and its recent accession to the Hong Kong Convention, another positive step forward to finally getting the convention enter into force in another market – certainly a big win for the overall industry. In fact, Bangladesh has become the latest country (amongst 20 others) to ratify the convention, and this is indeed an important milestone for the country.

Conversely, Pakistan is at real risk of being left behind, having failed to follow India and Bangladesh in upgrading their facilities to follow HKC guidelines / requirements, atop the ongoing profound economic, political, and financial chaos that is currently afflicting the nation – Gadani really has become virtually redundant as a viable sub-continent recycling destination. India has endured another steady if unspectacular week, as prices remain muted and well below expectations, mixed in with the lack of tonnage and no fresh arrivals at the waterfront, leaving another week of unfulfilled sales. On the Western front, Turkey spends a quiet week on holidays, with no real movement locally, as Eid celebrations get underway. Overall, tonnage flow has, as expected, cooled over the recent month and the industry is certainly hoping on some post-holiday improvement in prices, in order to get the industry moving again”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide