Demolition Rates Picking Up, Sales Expected to Follow Suit

With the resurgence of ships’ demolition sales critical for the rebalancing of the supply-demand equilibrium in the shipping markets, it’s probably good news, that prices offered by scrapyards are starting to rise once again, a trend which could trigger more sales of older units. In its latest weekly note, Clarkson Platou Hellas said that “we are once again reaching levels similar to those at the beginning of this year which is very encouraging given the slow state of affairs during the summer months and levels have certainly improved by some USD 40-50 per ldt over recent weeks as confidence and a positive sentiment has seemingly returned to the market”.

According to the shipbroker, “whilst the overview suggests is that it appears to be very busy, we are still not inundated with tonnage flowing on to the market and subsequently, few sales are being concluded, however the increased rates may well change this scenario as Owners could be tempted to dangle their tonnage under the noses of the cash buyers. Generally, the Bangladesh market appears muted and motionless having acquired a large volume of tonnage over recent weeks with little inquiry emanating from the waterfront, but their counterparts from India and Pakistan have stepped up their game with aggressive numbers being suggested. With the lack of availability of bulk carrier and container tonnage expected to continue towards the end of this year, impressive numbers could now be received if such units are suddenly workable, particularly the more favoured container units where Indian breakers may certainly be teased into producing exciting numbers for a preferred specification. Interestingly, it would appear that the container market is currently softening and we could possibly expect to see some of these candidates circulated in the forthcoming months”, Clarkson Platou Hellas said.

Meanwhile, in a separate note, Allied Shipbroking said that it was “another quiet week for the ship recycling market, with few new deals being reported across all sectors. In the dry bulk sector, other than a 33-year-old Handymax that was reportedly sold for $360/Ldt, there was no other notable transaction to speak of. With regards to the tanker sector, scrapping activity focused last week mainly on the oil products segments, with 3 vessels being reported sold, including amongst them a 22-year-old S. Korean built MR. In addition, a 1979 built FSO was sent to be beached in India. Vessels that have been beached in the last few weeks in the Bangladeshi market have increased significantly, as appetite amongst most breakers in the region having shown a remarkable recovery. In Pakistan, demand seems to be slowly on the rebound after the granting of cutting permissions given to several breakers. The Indian market seems to be a bit sluggish for the time being, seemingly having covered its interest for now and only looking to act on any high spec units that emerge. However, offered prices have increased across the whole of the Indian Sub-Continent”.

According to GMS, the world’s leading cash buyer, “on the back of some aggressive and ongoing Cash Buyer speculation, markets surged even further this week and a noteworthy fixture fetched an incredible price, breaching the coveted USD 500/LDT barrier. However, such bullishness is likely to be tapered soon, given that local offerings are still unable to match some of these outstanding levels on show (including the USD +450/LT levels seen on various VLCCs over preceding weeks) and local steel plate prices in India and Bangladesh registered declines this week. Indeed, local Buyers are starting to become nervous and alarmed at some of the massive numbers being ponied up by Cash Buyers and we may soon see some resistance, despite demand remaining excellent across (nearly) all locations due to the ongoing limited supply of tonnage.

Pakistan is finally starting to creep up again and this seems to be the market most Cash Buyers have been gambling on of late, particularly for VLCCs, given this markets recent reopening for tankers and fresh cutting permissions issued only a few weeks ago. There also were concerns surrounding the sudden announcement of a ‘mini budget’ in Pakistan and increased duties on steel products. However, it seems that the overall impact on the domestic ship recycling sector will be marginal, subsequently easing concerns of Gadani Buyers. Meanwhile, despite hitting historical and unprecedented lows, the Indian Rupee appears to have stabilized this week; however, local steel prices continue their volatile dance, ending the week on an overall weaker note. Finally, Turkey and China maintain their status quo, in line with recent weeks”, GMS concluded in its latest weekly note.

Nikos Roussanoglou, Hellenic Shipping News Worldwide