Demolition Activity Will Pick Up Pace If More Tonnage is Offered

Ships’ recycling activity could be much more brisker if more tonnage was available for sale. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as we enter the seasonal Diwali festivities, the true meaning being the celebration of light, making a fresh start and new beginning – these words really do echo the overall feeling in the recycling industry at this current time when the Covid-19 virus continues to place a dampener on sentiment worldwide – however, perhaps some much needed light is shining through the gloom as the global reports suggesting a workable vaccine is imminent which has helped financial markets rally impressively this week. This had a knock-on effect in the Indian sub. Continent as their domestic steel markets also benefitted with slight increased rates from recent weeks. Many at the beginning of the week were starting to talk the market down and say that it had plateaued, with capacity becoming a problem in Pakistan in particular.

The shipbroker concluded that “however, the recent tanker sales, as reported below, suggest otherwise, and clearly highlights once again that if a scarce type of tonnage is dangled into the market, there are still an army of Buyers willing to compete against each other which results in increased levels. However, we still do not have a settled market where we know the definitive levels for specific vessels – this definitely will require more candidates over a prolonged period of time before we truly know where the market specifically lies.

We did also finally see the first straight VLCC sold for over 18 months this week, albeit a damaged unit, but as we had predicted in last week’s report, the market in this sector is becoming swollen and it is only a matter of time before it over spills and Owners of these large tankers need to start switching their attention to the recycling industry”, Clarkson Platou Hellas concluded.

In a separate report this week, GMS , the world’s leading cash buyer of ships, said that “despite End Buyers talking markets down, deals continue to be done at ever more impressive numbers, as Cash Buyers keep prices on select units propped up, with increasing hints of levels breaching the USD 400/LDT mark. In Pakistan, even though several End Buyers have already filled their yards with tonnage, a majority of this week’s market deals have been concluded into Gadani – some at previously unthinkable levels.

Of late, India too has backed Pakistan up, largely on HKC green tonnage and units with above average non-ferrous quantities. However, the Indian market has been largely celebrating Diwali from the tail-end of the week and local Buyers have been distracted with the ongoing celebrations. In Bangladesh, in another blow to its members (who have recycled nearly all of the large LDT tonnage delivered into Chattogram during the early part of the year and are becoming increasingly eager to secure tonnage once again), the cartel has failed to take advantage of local prices and have subsequently missed out on a majority of the market vessels yet again. On the far end, the Turkish market has finally reported some positive news via significant gains on the Lira, as even local steel plate prices registered improvements, helping the Turkish market end the week on an overall positive note. Meanwhile, the list of EU ship recycling yards published by the European Commission on November 11, 2020, currently stands at 8 yards in Turkey, with 34 yards in Europe and 1 yard in the U.S.A. Yet, all of the 43 yards are unable to cope with (and many do not even have the capacity or capability to cut larger LDT vessels) the supply of regularly trading European flagged vessels or with last ports of call in Europe, resulting in an overall backlog of tonnage. This has presented lucrative opportunities for those EU approved yards, which are currently only offering around 25% of the price available in the Indian sub-continent recycling markets”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide