Ship Recycling Activity Posts Strong Recovery

The ship recycling market has shown signs of a strong recovery, as prices have increased and more owners have the financial incentive to sell their older ships. In its latest weekly report, shipbroker Clarkson Platou Hellas hailed the second HKC compliant yard in Bangladesh, announced this week. “The S.N. Corporation Bangladesh ship recycling yard has been rewarded for its efforts in upgrading their yard to regulatory standards by receiving certification by NK Class as being compliant for the Hong Kong Convention (HKC) under the IMO guidelines. An incredible achievement which brings further steps in line with greater green ship recycling at this destination. Seemingly, it will only be a matter of time before another yard receives such HKC compliancy recognition. Certainly, we are seeing more inquiry and urgency from the Chattogram recyclers as their financial issues that have plagued their purchasing activity over recent times looks to ease further as we approach the time of Ramadan. Their current price indications are now exceeding those from India, and we do anticipate seeing fresh units arrive to their waterfront, including possibly the larger sized tonnage. The supply of new units into the market continues to be at a slow pace with a mix of applicants being seen from the dry bulk and container sector only”, Clarkson Platou Hellas said.

In a separate note, shipbroker Allied Shipbroking said that “ship recycling continued with confidence and another 30+ year old gas carrier sold at a high price. Confirming the price achieved by the comparable “Adriatic Energy” (32,303 LDT) just a week before, the “Grace Energy” (30,426 LDT) sold for over $680/LDT again likely helped by the large amount of aluminium and other premium metals on board. Despite prices at Alang rising, Bangladeshi prices remain noticeably more attractive and, provided financing can be found for larger purchases, sellers will no doubt be targeting breakers there.

Bangladesh’s HKC offering was strengthened by the certification of S.N. Corporation’s Unit-02 recycling yard as meeting the standards required under the Hong Kong Convention. Separately, the PHP Ship recycling facility in Bangladesh became the first yard in the country certified by NYK Line as meeting their environmental standards and received their recently retired “Kamo” (Allied Market Review Week 5). While India already has 30 NYK certified yards, and similar dominance with respect to HKC compliance, these are promising steps for Bangladesh”.

Meanwhile, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said in its latest report that “recycling markets remain firmly poised for another week, following a stunning resurgence by the Bangladeshi market (in particular) that leaves them atop the price rankings board. Indeed, levels close to and even over USD 600/LDT are now being regularly presented on various vessels and this is inducing more Ship Owners to sell their vessels, especially as freight rates in the dry bulk and container sectors are failing to improve sufficiently for Owners to keep holding onto their aging tonnage. Cape rates have come back this past week, leaving question marks over whether the larger LDT dry units will hit recycling markets any time soon. Overall, container and dry bulk chartering levels are still sufficiently down from the previous few restorative years.

Tankers are pretty much assured not to come for recycling anytime soon – especially as wet tonnage continues to earn impressively high numbers after the last few years of bloodletting and pain. On the local markets front, after an extremely barren 8 months or so in Bangladesh, it is good to see the market there back firing on all cylinders and some excellent numbers have been seen in recent weeks, particularly on various LNGS, Capes, and Containers. India lags a rampant Bangladesh by some ways but is still competitive on the raft of green HKC vessels that continue to be made available, and sentiments are indeed firming again in Alang off the back of a repeal in import duty on floating assets for recycling. Pakistan is stranded far from any meaningful activity – both struggling with L/Cs and competitive pricing, so there is little sense talking vessels into a marginalized Gadani at present. Finally, the Turkish market has reported a softening of import steel rates as the Lira plummets to a new record low approaching TRY 19.X against the U.S. Dollar”, GMS concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide