Ships’ demolition activity falters as prices tumble

Ships’ demolition activity falters as prices tumble
TINNews |

The supply side of the shipping markets could soon be faced with yet another setback, should the current state of the demolition activity remains as is, i.e. with diminishing sales of ships sent for scrap. The rebound in freight rates, both in the dry bulk, as well as in the tanker markets of late, has prompted ship owners to refrain from seeking further scrapping opportunities. In its latest weekly report, GMS, the world’s leading cash buyer said that “in keeping with the diminutive performance of the industry over the last several weeks, shiprecycling markets endured another turbulent week as prices inched ever lower amidst volatile currencies and spiraling local steel plate prices. Supply too, perhaps because of, has eased up of late”.

According to GMS, “as such, these remain difficult times for those left with unsold vessels as there seem to be very few open end Buyers who are willing to negotiate / offer on available tonnage at present – especially whilst the ongoing market uncertainty persists amidst the high asking prices from Ship Owners and Cash Buyers alike. On the sales front, it has been yet another slow week and this may perhaps help bring prices back to their previous highs, at or above the coveted USD 400/LDT mark once again. Meanwhile, as commodities and stock markets remain at record highs, this recent slowdown in steel plate prices and levels across the sub-continent/Turkish markets is certainly a curious one and could be a result of Diwali holidays in India and the Communist Party Conference in China, which has seen ship recycling activities and steel sales (in China) grind to a halt. Inventories at ship recycling yards across sub-continent locations have been stockpiling of late as well and end buyers in Bangladesh have been refusing to offload their inventory at some of the lower plate prices seen of late, in an attempt to inflate resale levels once again. It may therefore be a slower period in Bangladesh (in particular), with a number of large LDT units having beached there over the last few months and cutting reportedly yet to begin. On the other side, Pakistan continues to offer hope via the reopening of the local market for tankers once again. However, given the delays witnessed thus far, it is expected (hoped) to take at least another month-or-so, in addition to a series of local fixtures to end buyers before confidence to acquire wet tonnage at pace, surfaces again”, GMS concluded.

Meanwhile, shipbroker Clarkson Platou Hellas added that “with the Diwali festivities in full swing, the market this week has remained significantly quiet, woken only by encouraging news from Bangladesh where one yard (PHP Shipbreaking and Recycling Industries) became the first yard in Chittagong to be awarded a statement of compliance under the Hong Kong Convention for the Safe and Environmentally Sound Recycling of ships. After much financial outlay to bring the yard up to such a standard, Rina Class have issued the certificate and the hard efforts by all involved domestically have bene rewarded. Now we shall see if other yards bring themselves in to a similar line to further create competition with their counterparts from India in this respect. Otherwise, a very quiet week in regards to activity and new tonnage proposals has been evident this week. Looking across to the Far East where the market in China can only be described as dull, with price levels still stuck in the mid $200’s/ldt. We would expect to see one final push from local Owners to sell any ageing tonnage in the next month before the end of the Government imposed subsidies, which have lasted for four years. Once completed, we may start to slowly see Chinese buyers become more aggressive for internationally owned vessels once again and provide healthy competition for the Indian sub-continent, especially for Owners looking to sell for ‘Green Recycling’, said Clarkson Platou Hellas.

In a separate note, Allied Shipbroking added that “this week followed the declining momentum as was previously feared, with things somehow quietening down even more. With a reverse in sentiment now clearly apparent, the recycling market is struggling to return to a balancing point. Offered prices being quoted have been on a downward correction, even if the drop has been marginal for the time being. At the same time there has been a lack of activity being seen in the bigger size vessels, with ever fewer demo candidates being seen in the market, likely driven by the improvement in earnings noted for these size segments. In the India Subcontinent, even with the Diwali holidays overshadowing the market, India continued its remarkable presence in the market, managing to grab a considerable amount of activity willing still managing to overall uphold its price levels to a relatively fair degree. At the same time, limited activity among Bangladeshi and Pakistani buyers has softened competition in the region. Cash buyers look to be holding back now, having found an opportunity to push back in terms of pricing and looking to better take advantage of any opportunities that emerge”, the shipbroker concluded.

 

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