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The ship recycling market has had a challenging 2022, with a general lack of activity. In its latest weekly report, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said that “as we close out another year, sub-continent markets remain suspended at their weakest point for some time now. Pricing remains firm (given the historical price average has been around USD 350/LDT or so), but sentiments and conditions on the ground across all locations remain somewhat precarious. While Bangladesh has been the main proponent of such concern – given the ongoing financial crisis that has resulted in the Bangladeshi government restricting the sanctioning of new Letters of Credit (L/Cs) for even the smallest purchases of USD 1 million and below – this week, the Pakistani government threw its hat in the ring as well, restricting a bevy of L/Cs being sanctioned on recent local purchases. Only very few Bangladeshi buyers with private financing and Usance L/Cs are able to acquire new units, but even so, many end users seem content to take a break and watch market developments before committing afresh, with prices so uncertain”.

According to GMS, “the picture in India remains slightly rosier, even though levels have cooled off some USD 200/LDT since the peaks of over USD 700/LDT seen earlier this year. On the far end, Turkey spent another slow week devoid of tonnage, but reported marginal improvements in import and local steel – without much fanfare. Overall, it seems many end buyers are likely still cautious, given the sustained ferocity of the falls, and having filled their plots with more expensive units at the start of the year, are now troubled as to when to buy anew to even out those losses. Port reports have been a testament to the fact that there have been very few arrivals over the last 6 months and only now that tonnage flow is starting to increase are we seeing some movement in those markets that are able to import new vessels at some increasingly bullish numbers”, GMS concluded.

In a separate note, Star Asia Shipbroking said that “during 2022, ship recycling prices in the Indian subcontinent have fluctuated by about 36% from January to December. The upside in the prices seen for a typical ship was region US$680 ~ 700/ first quarter of 2022 and saw the lowest at US$480 ~ 500/ton, an apparent US$200/ton decrease within the same year. Complex issues and risks in 2022 have not gone away and uncertainties of 2022 seem to be carried forward in 2023 for the initial period. Bangladesh technically ceased purchasing this year and took a pause, leaving markets stunned.

The only saving grace in avoiding a free fall in prices as a result of these dramatic changes was a shortage of ship supply. Now, Pakistan will likely follow suit, with the possibility of a pause from Gaddani recyclers due to banks conserving foreign exchange. As we advance, ship recycling prices should become even more volatile, as price directions will be determined by how long the Bangladesh and Pakistan markets remain muted with ship supply easing. In general, the market participants believe that 2023 will be the year of rebalancing, with rates returning to pre-COVID levels. Elsewhere, in Europe and the U.S., the demand for scrap remained subdued, but the prices of semi-finished and finished steel products saw momentum, with prices recovering. Harsh winters are also playing a vital role in scrap trades as the collection slows down. In China, a major shift in the Zero COVID policy lately added optimism, and to further optimise the time lost, China has been hinting that they would take extraordinary measures to stimulate growth to revive the ailing economy quickly, especially in the manufacturing and real estate sectors”, Star Asia Shipbroking concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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