Capesizes and Containers Heading for Recycling
More and more Capesize dry bulkers, but also container ships are being sold for scrap, with ship owners looking to help alleviate each market’s fundamentals. In its latest weekly report, Clarkson Platou Hellas said that “with the upcoming Easter holidays commencing from this weekend, most Brokers and Owners seem to have already lined up their time off as the limited number of vessels being circulated was quite evident providing a quiet feeling in the market. It can only be likened to an Easter egg hunt where everyone is trying to find any activity that is of any significant note before the holiday period descends upon us. This does seem to be a concern as the Holy month of Ramadan coupled with the oncoming Monsoon season gives a bleak outlook on sales activity. There are still some potential discussions circulating in the market place but it would appear these are now for tonnage not actually workable as brokers vie for positions for future commitments or Owners seeking ‘yesterdays’ prices and have unrealistic levels in their minds despite, what many feels, are historically high prices. The positive news whispered from Pakistan in recent weeks doesn’t seem to have fully developed as many expected it to. There was a feeling we would start to see some strong enquiry from the recyclers locally which may have established them as serious rivals to their Indian counterparts once again, however the Ramadan holidays may stem this for the time being”.
In a separate note, Allied Shipbroking noted that “as it was expected, activity remained subdued during this past week as part of the Easter holiday slump. With sentiment in the dry bulk sector starting to improve slightly in terms of hire rates, the flow of demo candidates may start to ease back slightly once more. The only exception being that of the Capesize segment, as current earnings are still at levels which can continue to entice owners of older age tonnage to take up the ship recycling option. On the tankers side, the prevailing positive market outlook still works as a strong detriment to the demolition market. With regards to market share across the different ship recycling destinations, Bangladesh continues hold top preference thanks to the much better numbers seen there. Indian breakers have intensified their attempt to attract more cash buyers lately, but offer prices still remain a touch softer for now. At the same time Pakistan remains far behind the competition for now, while with an election period now fast approaching, it seems hard to see how this could change any time soon”, the shipbroker said.
Meanwhile, GMS, the world’s leading cash buyer, said that “as we near the cut off date of the Bangladeshi budget on June 5th and the upcoming monsoon season across the subcontinent markets, deals keep being concluded – particulary in the beleaguered Capesize bulker and container sectors. A red hot Chattogram market has been (and continues) securing a majority of the market tonnage, at levels in the mid-to-high USD 400s/LDT, whilst the competing Indian and Pakistani markets struggle some USD 20 – USD 30/LDT behind. There are growing expectations that new taxes / duties might be introduced in the Bangladeshi budget, which is why end Buyers are nervous about acquiring vessels post-June 5th and are primarily looking for prompt deliveries at this time. India too has taken in a steady flow of HKC SoC green units along with offshore vessels this year and this trend is certainly set to continue, going into the second-half of 2019. Pakistan still remains stranded some ways behind both Bangladesh and India and has really only been taking small LDT vessels this year (fearful of their exposure on some of the larger units on offer). However, prices in Pakistan have at least been inching up of late, but this is still not enough for them to be competitive (even with India at present). As such, given the rate at which things are progressing in Gadani, it will take some more time for local Buyers to start acquiringtheir share of the market tonnage once again. Finally, the Turkish market seems to have hit a“freeze” of sorts, with currency, fundamentals and (negative) sentiments all stagnating over the last couple of weeks” GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide