Competition Heats up in the Demolition Market
With both Bangladesh and Pakistan now in overdrive, it would appear the Indian recyclers will have to rely on tonnage from Owners seeking HKC compliant Green recycling only. News from India this week surfaced of a concern in relation to the ever increasing Covid-19 daily rates. Whilst talks are ongoing, the recycling industry (ship recycling yards / steel mills) may face a shortage of oxygen bottles (required for cutting purposes) as the Gujarat Authorities have informed all oxygen producing units must be supplied to Covid care centres and hospitals. This would decrease the production on the yards by some considerable percentage but at this difficult time, the bottles are definitely more needed elsewhere”, Clarkson Platou Hellas said.
In a separate note, Allied Shipbroking added that “it was another week of robust activity for the ship recycling market, as it seems that there are several owners, which are keen to offload their vintage tonnage on the current improved pricing levels. However, concerns about the increasing momentum of prices have started to mount amongst breakers and thus we should not expect any further significant ramp up anytime soon. These worries have increased rumors in Bangladesh for a potential cartel that could be shaped by local players in order to control prices. Undoubtedly, this will affect activity in the country at least in the short-term, as competition in the Indian Sub-Continent has been mounting as of late. Meanwhile, the diminished interest for scrapping in India has started to worry domestic end-buyers, while weaker Indian Rupee and rising COVID19 cases in the country are worsening conditions even further. Finally, given the busy schedule noted for Pakistani breakers, it is likely that the market there has reached a temporary ceiling, as enquiries have started to slowdown significantly. However, as long as the domestic breakers remain attractive in their offered price levels, we should continue to see activity head in their direction”.
Meanwhile, in its latest weekly report, GMS, the world’s leading cash buyer of ships said that “following the catastrophic falls of around USD 150/LDT during the second quarter of the year and with all subcontinent markets now securing tonnage at increasing numbers of late, the 2020 subcontinent recovery seems nearly complete. There are some concerns over whether prices will keep going up (and for how long), and there are even rumors that the BSBA (Bangladesh Ship Breakers Association) may try to form another cartel next week, in order to put a cap on prices, which a majority of local Recyclers feel are getting over-inflated once again. Indeed, there is the feeling that Pakistan has reached its peak, whilst India has endured some shaky steel prices once again, briefly stalling some of the progress made by this market in recent weeks. Therefore, there are some doubts from veteran players as to whether the industry will witness USD 400/LDT (or close) levels on standard, non specialist tonnage any time soon. Finally, the Turkish market continues to coast for yet another week, with levels steady, plate prices on even keel, and the occasional arrival of another unit for EUSRR recycling. Meanwhile, the world has been witnessing a second wave of Covid infections, particularly across parts of Europe where there are now increasing fears of a second lockdown. This comes as at a time when India continues to struggle with record daily cases nearing 100,000 infections, with few signs that this virus is going away any time soon”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide