Tankers’ demolition sales pick up pace

Tankers sold for demolition in SouthEast Asian scrapyards has accelerated over the course of the past few days, despite the fact that the monsoon season, means that scrapping activity is usually slower. In its latest weekly report, GMS, the world’s leading cash buyer of vessels, said that “the supply of tankers into the Indian sub-continent recycling markets continued at pace for another week as several more high profile sales materialized (including two VLCCs). This follows on from the recent aframax and suezmax sales at ever-improving numbers as the sub-continent markets look to get back on their feet following an awkward phase where prices deteriorated by about USD 50/LT LDT due to a combination of negative budgets and declining local steel plate prices”.

According to GMS, “now that the Bangladeshi budget has finally been withdrawn and clarity has emerged on the Pakistani budget as well, the ongoing reticence from ship recyclers has turned into a renewed aggression to acquire fresh units and some of the empty plots are swiftly being booked with choice tonnage. Pakistan remains closed for tankers after the tragic accidents on an uncleaned FSU and LPG earlier this year, which subsequently resulted in numerous (avoidable) fatalities. Yet, rumors persist of an imminent reopening to tankers, albeit with far greater restrictions / guidelines on tanker cleanliness (to hot works standards like India and Bangladesh) prior entry into Gadani. This would be an ideal opportunity to remind tanker owners that gas free for hot works standards means that all cargo / cargo residues, slops and sludges would have to be completely cleaned from all cargo and slop tanks, right down to the ladders, handrails and cargo pipelines. Indeed, the rules for cutting a wet ship in India and Bangladesh are far more stringent than many of the international gas free standards and it is worth those owners seeking to deliver their vessels ‘gas free for hot works’ clean, consult with a reliable cash buyer to ensure that the appropriate safety standards are met and deliveries remain timely and smooth”, GMS said.

In a separate report, shipbroker Clarkson Platou Hellas said that “it certainly is a difficult market to see through at the moment in terms of pricing and local sentiment but the one clear factor is that more tanker units are coming into the market. Clients of NITC have sold two VLCC’s this week and in addition, placed another two in to the market place. Another suezmax has been committed this week, as reported below, and again an intriguing price was achieved. Whether these sales achieve a profit for the cash buyers in question remains to be seen but at the time of writing, it is believed these units sold this week are still waiting to be resold to the actual ship recyclers (breakers). The lack of tonnage is certainly continuing and it remains unclear as to when future tonnage availability will come to fruition from Owners in view of the summer holidays that are now in play. The supply of tonnage is significantly reduced from this time last year and current statistics show that for all dry units, we are down by almost 50% and even more alarmingly is the supply of Capesize units where 67 were sold at this point last year compared to a mere 19 so far this year. The supply on the ‘wet’ side tells a different story, being around 10% only down from this time last year. However with rates under pressure, and evidenced by recent sales and market proposals, we can foresee tanker sales increasing in the months ahead”, Clarkson Platou Hellas concluded.

Similarly, Allied Shipbroking noted that “there was a fair amount of speculative buying taking place this past week, with price levels seeing a strong boost across the Indian SubContinent. Part of this has been fueled by the renewed interest and appetite being noted from Bangladeshi breakers, while most of the boost noted seems to have gone towards higher spec units with larger LDT especially for tankers and containers. This seems to be a momentary rally and we are likely to see the upward momentum fall back once again, since we are still within the monsoon season and breaking activity is still holding at a significantly slower pace. At the same time the fact that we are still seeing a minimal amount of demo candidates coming to market means that the supply side has played its part in boosting competition and helping push for the renewed improvement in offered prices”, the shipbroker concluded.