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Demolition Activity Expected to Remain Elevated

Ships sold for recycling have increased in numbers over the course of the past few weeks. While last week wasn’t equally active in terms of deals, activity is still rather vivid, indicating that more deals are on the horizon. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “in what has been a subdued week compared to recent weeks in the recycling market, there have still been plenty of talk and gossip in relation to rumoured negotiations and potential new units in the market but with little coming to fruition as seen by the lack of sales reported below. This is despite Pakistan remaining the hottest of the three recycling destinations in the Sub-Continent and the best opportunity for willing Sellers trying to dispose of their vintage units”.

According to the shipbroker, “many do feel there is still room left to manoeuvre and that this is not just a purple patch for them after lying in hibernation for the best period of two years from the frontline. From experience, these recyclers from Pakistan will not remain too lofty in their rates compared their counterparts elsewhere and therefore it really is a case of striking whilst the iron is hot. India has struggled to maintain their recent indications this week as they continue to operate with a very limited production rate. Slow cutting procedures due to the lack of workforce on site, plus the monsoon rains, is reducing the pace of the movement of the inventories from the yards, and many predict that we will not see a bounce back from this destination until November at the earliest, especially as the rate of Covid-19 cases continues to increase per day. Unless tonnage is made available for green recycling, then it is feared that these recyclers will lose tonnage to their counterparts in Bangladesh and Pakistan for the foreseeable future. As reported in previous weeks, it has been confirmed this week that the EU yards in Turkey are full until the end of the year with limited space available at the other EU facilities on the Continent who are not all fully operational or able to take larger LDT units. With Maersk having sold the largest container unit sold for recycling to this destination for EU approved recycling yard, it is rumoured that this vessel may have to remain at the anchorage for up to two months until the yard it is destined for becomes free. This clearly shows the lack of capacity for a large volume of tonnage that had become or will become available for recycling sale at an EU approved yard which clearly contradicts those in the EU authorities and the environmental organisations suggesting there is plenty of space available. It is therefore imperative that the EU commission acknowledge this shortfall and start to speed up the process for approving alternative yards in Turkey which are up to EU recycling standards and have been waiting for a ‘rubber stamp’ since the start of this year, and push forward the case for India to seriously now be considered by them”, Clarkson Platou Hellas concuded

Source: GMS

Meanwhie, in a separate note this week, GMS, the world’s leading cash buyer of ships said that “all subcontinent locations have enjoyed several weeks of positivity, as sales have and continue to take place at increasingly firm numbers. VLOCs, containers of all sizes, and PCTCs have been the flavor of recent times, as the dry bulk market has been resurgent of late and tankers rates continue to post good numbers (despite some recent significant declines in wet charter rates). As such, all markets have managed to secure their share of tonnage, with India being mostly reliant on HKC green tonnage as they are no longer competitive on market vessels, given the much better placed Pakistani and Bangladeshi markets that have been surging ahead (in terms of prices) of late. Indeed, several sales into Pakistan over the past week(s) seemed to defy belief as one container vessel was sold for a whopping USD 344/LT LDT and a bulker achieved similarly impressive numbers approaching USD 340s/LT LDT. These deals can be explained as individual Buyers jumping back in to secure their favored type / sized units to satisfy their LC / bank limits, having been out of the buying for well over two years now. Certainly demand and capacity is excellent in Pakistan, with India and Bangladesh having secured a majority of the larger LDT containers & VLOCs in recent months and Gadani certainly seems to be the market to keep an eye on, especially in the near future”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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