Ship Recycling: Tonnage Supply Scarce

The ship recycling has crawled down to a halt over the past week, as Easter Holidays had an impact in overall activity. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the supply of tonnage to the market has slowed considerably with only a handful of units being circulated into the market. The question is whether they will be sold for recycling or if some traders come out of the woodwork whilst charter rates improve. Clients of Evergreen this week circulated two sister container vessels, the ‘Ever Unific’ and the ‘Ever Uberty’, both built 1999 and of about 24,300 ldt. Offers are due to be registered by 7th April, 2023 and reports suggest that there are some potential trading buyers showing interest so time will tell whether they find have a final voyage to a recycling yard. There have been reports that the steel markets in Bangladesh have weakened this week, some parties suggesting the equivalent of about USD 40-50/ldt but as yet, we are not seeing signs of such a drop. With Ramadan now under way and the forthcoming global Easter holidays creeping up, this quiet and inactive period looks set to continue for several weeks”.

In a separate note, shipbroker Allied Shipbroking added that “nothing of note to report following a very quiet week. The container vessel ‘Leopard’ has arrived at Alang for demolition, having been sold previously, in addition to a couple of vessels arriving at Chittagong. The ‘Win Shun Shing’ of around 2200 LDT is the only sale of the past week. Prices declined across ship recycling nations last week with no significant changes to market fundamentals and, if anything, a slightly worse outlook with reduced forecasts for growth both globally and countries in the Indian Subcontinent.

Further to this, steel demand has failed to live up to expectations from the start of the year and prices are unable to support higher offerings from buyers. Tanker markets remain bullish and dry bulk earnings are holding their ground at current levels. Containership earnings have suffered significant declines which appear likely to remain with us for a while due to the expected vessel deliveries, potentially encouraging owners to dispose of older vessels. In what might become an early example of this, Tradewinds has reported that Evergreen is currently circulating two older container vessels built in 1998 and 1999”.

Meanwhile, GMS (www.gmsinc.net), the world’s leading cash buyer of ships commented this week that “with holidays underway across much of the world, it has been a far quieter week in terms of sales & activity, whilst sentiments and pricing remain further muted as a result. Several vessels have arrived in Bangladesh for delivery this week despite it taking much longer these days to get the L/Cs in order. As such, to have smooth boardings & beachings, it is therefore recommended to maintain at least five days prior arrival, in order to allow for local Buyers L/Cs to open, release, and be credited to Owners / Cash Buyers before vessels can beach. Particularly in Bangladesh, the situation remains somewhat precarious in obtaining Central Bank Approval on the particularly higher value assets, so drastic remains the ongoing liquidity problem in the country.

In Pakistan, it has been nearly impossible to open any L/Cs and neither Owners nor Cash Buyers are considering Gadani as a viable destination, especially in the near future. Finally, Turkey continues its dreary drudge through the year, week after week, with not much change to report other than local steel plate prices that have been fluctuating within a margin and a determined Lira that is steadily deteriorating against the U.S. Dollar. Overall, pursuant to the conclusion of Chinese New Year holidays, there was an improvement in both Dry Bulk and Containers for trading / charter, and this has led to a dearth in vessels being proposed for recycling and arriving at most waterfronts, as port reports remained virtually empty across the sub-continent & Turkey through most of March. Notwithstanding, recycling prices remain relatively steady / strong, as do local sentiments, which are expected to pick up further after the holidays this month, as demand increases and fundamentals stabilizes in the form of steel prices and most local currencies”, GMS concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide