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All types of tonnage in line for demolition as market picks up pace

The hiatus of the demolition market during the past couple of months is officially over, as more and more ship owners are in active negotiations with scrapyards, regarding the sale of old units. In its latest weekly note, shipbroker Clarkson Platou Hellas said that “the market returned to some normality with varied negotiations and rumours surrounding all types of tonnage making the market feel busy on the outside but with actual concluded at only handful. Not only this, there is a wide spread of price indications on the table, which clearly shows that Cash Buyers are either being conservative or over speculative, with nothing really in between. However, there is definitely a more positive sentiment after the summer holidays with many Cash Buyers eager to acquire tonnage once again, mainly on the back of renewed appetite from all the Sub. Continent areas, but particularly from the Bangladeshi recyclers. The one concerning factor still lies with continuing demise of the Indian Rupee which this week lost further ground against the US dollar. These fluctuations are making it difficult for Buyers to judge the forward delivery positions in the market and is the main contributor to stopping the Sub-continent from running away with itself as domestic steel prices remain buoyant”, Clarkson Platou Hellas said.

In a separate note, Allied Shipbroking added that “the gear up noted during the past week has helped things ease back in the recycling market, given the prolonged sluggish mode the market had entered. So, on this point, most still debate in terms of reasonings behind these recent trends. It has been already stated many times, that the dry sector is just a bystander for the time being, a sector that for many years has played a leading role in feeding volume in the demolition market. The record scrapping activity though coming from the tanker side succeeded in covering to some degree the lack of tonnage availability coming from the dry bulk sector. However, given that there is still excess wet tonnage capacity circulated the market right now and facing at the same time a decreasing demand for this type of units, the weakness of other main ship sectors to push things further is becoming apparent. Furthermore, a softening in Indian’s currency and a volatile steel market are adding pressure to the current quoted scrap price levels, which in turn could disrupt further the curbed flow of demo candidates. Given all this, the upcoming weeks will be of high interest, in order to get a better picture in terms of the overall direction the market is inclined to take moving forward”, Allied concluded.

Meanwhile, according to GMS, the world’s leading cash buyer, “some extraordinarily speculative sales were registered this week as a few Cash Buyers (ones rumored to have fresh access to funding) seem intent on bidding well ahead of the market, in anticipation of firming rates ahead. This move was probably initiated last week with the high priced sales of a Cape and a VLCC on an ‘as is’ basis, at some massive numbers that are certainly not reflective of current market realities. In fact, all markets have displayed worrying signs of a possible decline in preceding weeks, making much of the recent offerings highly confusing and risky for Ship Owners and Cash Buyers alike. As it stands, Pakistan remains stuffed with tanker tonnage that have only recently received cutting permission, albeit only on a handful of the plethora of units that were beached several months ago.

Furthermore, they have also been beset with an announcement of a ‘mini’ budget, the outcome of which local Buyers are waiting for. Bangladesh has suffered a week of declines in local steel plate prices and has consequently dropped to lowest placed of all the subcontinent markets. L/C issues have also plagued the industry of late, with very few banks willing to sanction limits on the locally favored large LDT vessels such as VLCCs, Capes and Suezmax tankers. Wrapping up the subcontinent news is the Indian Rupee, which continues to endure weeks of crippling depreciations in unprecedented and historical lows, trading well over Rs. 72 against the U.S. Dollar, finally settling a touch this week and bringing some much-needed positivity to the local market. Finally, as China remains marooned in a Neverland of its own making, Turkey is probably the only market to report noteworthy positive gains in both fundamentals i.e. local steel plate prices as well as the Turkish Lira, resulting in firming levels this week”, GMS concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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