The return of Bangladesh in the ships’ recycling market captured all the headlines this past week. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “after months of what can only be described as a sluggish market, and as aforementioned last week, the shackles are now firmly off the Bangladeshi recyclers and we have seen a substantial increase in price levels from this region, as highlighted by the two VLOC’s reported below, which seem to have pricked Owners ears to these new improved rates on offer and providing a much needed catalyst for the market. Hence, we have seen a small flurry of new units being proposed to what is now a hungry market, particularly of the larger size. Having now smashed through the 400/per ldt number, we do now expect to see more focus on the recycling market and do anticipate that we could now see a balanced supply and demand scenario where prices should remain firm going into Q1 next year, a positive sign for the whole shipping industry. There are also further reasons to be optimistic with sharp increases in Iron ore prices hitting a seven-year high, as the Chinese economy comes roaring back. With Iron ore being one of the significant raw materials for making steel, along with an improved domestic demand, Indian steel mills have hiked steel prices by around Rs 2000-2500 per tonne as of 1st of December. As per industry sources, local mills have hiked prices by Rs 2,500 – Rs 2,700 per tonne. We now hope that Owners will finally take the plunge and offer their vintage units for recycling with prices back to attractive levels”, the shipbroker said.
In a similar note, Intermodal added that “Bangladeshi breakers pretty much made the headlines with an increase of $30/ldt at their offered scrap prices materializing this past week and with reported sales being done at levels above $400/ldt. Pakistani cash buyers are now behind their Bangladeshi competitors; their bids remain high, however, with not the same odds to attract large favored sizes, with most of them now being destined to Bangladesh. In India, scrap rates followed the same pattern as the rest of the Indian subcontinent demo nations, with improvements being noted while Indian yards remained the best destination for HKC tonnage recycling. In Turkey, despite a weak TRY/USD exchange rate and a significant increase in COVID-19 cases, the consecutive rise in local steel prices provided the much-needed support to regional breakers in order to increase their bids for another week. Average prices in the different markets this week for tankers ranged between 230-410/ldt and those for dry bulk units between $220-400/ldt”, the shipbroker said.
Meanwhile, in a separate note this week, GMS , the world’s leading cash buyer of ships, said that “the dissolution of the cartel has seen prices shoot up in Bangladesh over this past week – perhaps to an irrational and somewhat speculative degree, as local levels cooled off towards the end of the week, in conjunction with declining local steel plate prices. Notwithstanding, Chattogram remains the top priced market in the industry and several larger LDT VLOC sales have taken place here to take the total number sold for recycling for the year to 27 (of which, GMS has negotiated 18). As prices soar past USD 400/LDT, we have seen a marked increase in the number of Ship Owners who are re-introducing their respective candidates for a recycling sale, as charter rates in certain sectors remain comparatively muted and recycling increasingly becomes the more viable option for aging assets again. Overall, demand and pricing remains healthy in Bangladesh and despite the customary volatility and constantly wavering steel prices, there is little doubt that this will be the market to watch for over the next few months, heading into 2021.
The cartel had subdued levels to such an extent that over the second and third quarters of the year, a majority of the market tonnage went either to India, or a rampant Pakistan, but that is all set to change now as it is business as usual in Chattogram once again. Therefore, expect a busy end to the year in the sub-continent recycling destinations, especially as supply picks up and activity ramps into higher gear, following a far more subdued few months post-summer. Finally, the Turkish market recorded another improvement in steel prices and this has further assisted local offerings to jump by about USD 5/MT this week”, GMS concluded.
Source: Hellenic Shipping