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Capesizes Sold for Scrap Increase In Numbers

The Capesize market has long been in negative territory, leaving ship owners with older ships in their “arsenal” with little no options. As such, over the course of the past few weeks, there’s been a wave of sales for demolition. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “after what has been a ferocious start to the year with 11 large dry units (VLOC’s/Capes) already sold into the Sub-continent for recycling, the market re-caught its breath and, unfortunately, briefly paused. With sentiment wavering and price levels falling further unexpectedly this week, Buyers confidence started to decline after more large dry units continued to swirl around the market whilst Owners attempt to relieve their fleet of the overaged units where no profit margin on the trading front can be seen. However, some feel that the market is yet to be oversupplied as many of these units are ending up on the Bangladeshi shores, leaving ample opportunity for the Indian and Pakistani end recyclers to seize tonnage anyway from their counterparts. But Owners will have to accept the new values currently on the table, some USD 20-30 per ldt lower than previous weeks. Once again, some encouraging and positive news emanated from India this week. We are delighted to report that another Indian ship recycler, the Shree Ram group, has received certification by Lloyds Register for safe and environmentally friendly ship recycling under the Hong Kong Convention, and covers Shree Ram’s shipbreaking plots 78, 81 and V7. This is another major breakthrough for the country in its pursuit for EU approval which uses Lloyds register in its audits of yards and is certainly a step in the right direction. Although, from previous discussions, it will be anyone’s guess as to when the E.U. finally ratify India and place some of these recycling yards on the E.U. list of approved recycling destinations. It cannot come soon enough to ease the pressure on the Turkish facilities”, Clarkson Platou Hellas concluded.

Source: Clarkson

Allied Shipbroking added in its latest weekly report that “the ship recycling market has remained robust as the current freight rate levels resume their downward trajectory. However, the decline noted as of late on some of the offered prices being seen from the side of breakers has limited activity by a slight amount, with most cash-buyers likely to take a more cautious stance in the days to follow. Most units reported are still being snapped up by Bangladesh, with owners finding up until now the more attractive offers there. Given though that local steel prices there have started to slide and slot capacity has also decreased, focus is expected to move over to other Indian Sub-Continent destinations. Despite the fact that India has shown recently a fairly strong track in taking over any slack left behind by Bangladesh, local breakers have not been able to take full advantage of the situation due to the poor fundamental they are facing themselves. Offered prices are likely to drop over the coming days given the sliding pattern noted in the Indian Rupee. Finally, despite that Pakistani breakers had started to regain some market share as of late, a depreciating local currency and with local steel plate prices being under pressure has put breakers there on the sidelines once again”.

Menwhile, in a separate note, GMS, the world’s leading cash buyer said that “after a rather positive start to the year (particularly for the rampant Indian market), subcontinent fundamentals have been reflecting weakened global shipping sentiments as declining steel plate prices and a diminishing demand on the back of a massive supply of vessels has suddenly ushered markets into negative territory. A plethora of Capesize Bulkers and Containers have been sold this year as yards in Alang and Bangladesh start to fill up after a frantic start to 2020.

Source: Allied

However, of late, the markets have lost about USD 25/LDT from the peaks of a few weeks ago and it seems as though most End Buyers are now content to wait-and-watch market developments, before committing on any of the number of available fresh candidates. Further troubling news on the Coronavirus from Wuhan that eventually affected ship recycling markets, emerged this week as it was announced in both India and Bangladesh that any ships with Chinese crew and / or last ports of call in China would be denied immediate entry, unless a period of quarantine is enforced onboard.
In Bangladesh, this amounts to about 21 days from the last port of call and we have already heard of Doctors being dispatched to incoming vessels, in order to assess the crew before boardings can commence and vessels are allowed to beach.

Thankfully some good news has been emerging from China in the past few days with reduced cases now being reported. Many cities remain on lockdown but most people are expected to filter back from their extended Chinese New Year holidays from next week onwards. So the likelihood is that this crisis will continue to run for some months, particularly with the number of international infection cases (and number of fatalities) still rising”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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