Demand Improves in the Demolition Market

The ships’ recycling market has perked up considerably over the course of the past week. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the market finally sparked back into some life this week with demand from Pakistan being the driving force behind this latest resurgence. The waterfront was offering some USD 30 per ldt more, reaching some impressive numbers once again. Bangladesh has also awoken and started to become competitive creating an even contest between both destinations. Some strong numbers have been paid for two VLOC’s this week which clearly confirms the current aggressive sentiment, in addition to the panamax bulk carrier reported below. With recyclers still being starved of tonnage, the expectation is that these solid rates will continue for the coming weeks should any meaningful candidates be circulated.

The question is, will these firmer rates tease Owners into parting with their older units despite the strong chartering markets? There was further good news to local steel markets in the sub-continent as Chinese steel rebar futures surged more than 5% on Wednesday to their highest level in about a decade. This has come from Government environmental pledges made to cut output and production, but with the demand for construction increasing the need for Steel. We therefore feel that with these fundamentals in place, the market looks in a healthy position for the foreseeable future, which is coupled with the Global vaccine rollout and Lockdown restrictions slowly being lifted. What will dictate prices going forward will be the supply of tonnage and how fast or slow the tap runs!”, the shipbroker concluded.

In a separate report this week, GMS , the world’s leading cash buyer of ships, said that “steel prices in Asian recycling markets (save for India) have shot back up again, as this roller coaster year continues. This time (and largely following a period on the sidelines at the start of this year) it is Pakistan, surging to the forefront of the pricing charts once again and regaining control of recycling industry’s attention. Bangladeshi Buyers are trying their best to keep up and have managed to secure at least one VLOC that was already in Cash Buyer hands this week. However, the show stopping sales for the week certainly took place into Pakistan. Demand has been steadily firming in Gadani since the 2020 mid-year-binge that saw them secure a majority of the market tonnage and following the boon on import duties and taxes mentioned last week, the ship recycling sector in Pakistan has really taken off this week.

It will be interesting to see if this most recent surge in Pakistan can be sustained for much of the year, or as with Bangladesh in mid-January, prices could come rolling down as steadily as they gained ground. At least Gadani buyers have some fierce competition from their Bangladeshi counterparts, who have seen steel prices claw much of the ground lost back and are hot on the heels of any market tonnage, particularly those geographically positioned in the Far East. India remains the lowest placed of all the subcontinent recycling markets yet again and it seems doubtful they will be able to secure much tonnage if the current trend persists, especially if there is a shortage of HKC green vessels and specialist (rich in non-ferrous) units for them at present. On the far end, the Turkish market finally evened out this week with local steel prices and steel imports reporting no major change for the week, resulting in vessel prices being unchanged. Even the Lira has weakened again, approaching the TRY 7.5 mark against the U.S. Dollar, leaving this market in a cautious state for the time being”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide