Ship recycling prices have kept on falling over the course of the past week. In its latest weekly report, shipbroker Allied noted that “activity remains concentrated in India and Bangladesh with Pakistan still out of the picture and Turkey making do with a handful of ex-European vessels that have arrived over recent weeks. Prices are continuing to slide, with the biggest month-on-month decrease seen in India. Despite this, India yards have been the location of choice for owners seeking HKC recycling, despite better prices and recent certified yards in Bangladesh. Low steel demand globally is unlikely to support higher prices in the short term and if prices continue to sink while vessel earnings remain healthy, we might see this dry spell continue. Four of the five new vessels reported as sold/arrived at breakers yards were over 25 years of age, such a high percentage of 25+ vessels has become something of a trend lately, indicating that owners do not feel the market incentives right now for the disposal of younger vessels. Last week saw no particularly large vessels sold or reported as arriving at breakers’ yards; ‘Horizon Pacific’ the largest at 17,224 ldt”, the shipbroker said.
In a similar note, shipbroker Clarkson Platou Hellas said that “Indian recyclers are again the crown jewels of the industry showing more determination to purchase any of the available tonnage, most of which require HKC compliant recycling.
However, both India and Bangladesh are reporting significant domestic steel price declines which are putting pressure on current sentiments. There is a desire to purchase tonnage, however price levels will be difficult to bring in to line with owners expectations”.
Meanwhile, in its latest weekly report, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said that “as we enter a period of contraction going into the traditionally weaker and quieter summer / monsoon months, sentiments have further declined across the sub-continent markets (and even Turkey) this week. To further compound the presently bearish ship recycling sentiments, local steel plate prices have further weakened at key destinations and LME steel futures show few signs of any sort of recovery in the immediate future. That being said, several vessels have been working firm over the past few weeks and sales have been taking place. However, these are primarily HKC intended units being committed into India, even at these gradually deteriorating rates. Moreover, due to a recent uptick in freight rates, fewer than expected Containers and Dry Bulk units have been introduced into the markets for recycling and this is giving the ship recycling industry, an opportunity to draw breath and find true bottom, before reoffering at these new (lower) realities.
The overall correction appears to be between USD 50 – USD 60/LDT since the peaks seen earlier this year. Due to such turbulence, it may be that End Buyers wish to wait and watch market developments before getting back into the buying once again. Bangladesh & India remain the two most active / competing markets for the time being, as Pakistan remains a non-entity for over two months now, completely out of the market action due to unworkable L/Cs, uncompetitive pricing, and a precarious financial and political outlook (especially in the near future). Finally, the Turkish market continues to deteriorate (as predicted last week), with weakening steel plate prices and a currency that seems likely to breach TRY 19.50 against the U.S. Dollar next week. As a result, Aliaga’s recycling prices have (negatively) re-adjusted by USD 10/MT”, GMS concluded.
Source: Hellenic Shipping News
