Home / Shipping News / Hellenic Shipping News / Demolition Market Could Come Under Stress Moving Forward

Demolition Market Could Come Under Stress Moving Forward

The ship recycling market could be headed for a turn of fortune, with prices offered edging downwards, as recyclers are growing wary of the existing market conditions. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “some caution has certainly descended on the market this week as reports suggest recyclers are concerned where the current market lies and what impact the latest Covid variant will have on local industries within the Indian sub-Continent. The volatility in global steel prices is now being reflected in the rates on offer from the recyclers with further corrections in India, whereas indications from Bangladesh and Pakistan remain stable, for now. The market is certainly slow and stagnant as of now with no great supply. Recyclers do have enquiries (there is demand), however, at their new corrected levels, but Owners are seemingly not willing to consider the lower levels currently on the table. With the Iron ore price falling to an 18-month low, rocked by dismal demand outlook for raw materials and steel products in China and higher output from producing nations, it is conceivable to believe that this very slow input of tonnage into the recycling sector will continue for some time yet”.

Source: Clarkson Platou (Hellas) ltd

Allied Shipbroking added in its weekly report that “the subdued interest for ship recycling market resumed this past week, with limited activity taking place in the market once again. The prime days of containerships and dry bulk carriers have vanished any interest from owners for recycling, leaving tanker owners as the only source of potential candidates for the scrapyards (among the key segments). The lack of fresh business is apparent as of late in Bangladesh, a previously very active market.

Source: Allied Shipbroking

Offered prices have started to lose some ground, decreasing further the interest from the side of owners. The same trend is witnessed in India, with few HKC deals monopolizing the market. Scrap prices have posted losses here as well as of late, nourished by the declining trajectory for local steel plate prices. Enquiries are scarce as of late in Pakistan as well. Worsening steel plate prices and weaken Pakistani Rupee has not allowed local players to attract some of the few candidates that are currently in the market. Finally, the slump of the Turkish Lira has curb interest for demolition in the country with less interest being witnessed for yet another week”.

Image by Naqiyah shabbir 

In a separate note, GMS , the world’s leading cash buyer of ships said that “the recycling markets remained subdued this week again, with very few (serious) transactions to note as price and demand have taken a serious hit over recent weeks. Indian steel plate prices have declined by well over USD 60/LDT, leaving the Alang market lagging seriously behind its regional competitors, whilst both Pakistan and Bangladesh remain tentative in submitting fresh offers as they watch India’s ongoing decline. As such, there have been very few new candidates to consider as Vessel Owners themselves have decided to take a step back from recycling any eligible units, perhaps hoping for freight markets to pick up again going into 2022. Currencies continue to be of concern, both in Turkey and even in Pakistan, where the PKR reportedly depreciated by about 1.5% since November 20th.

Source: GMS,Inc

This has led to minimal buying interest from Gadani Recyclers on the marginal number of vessels currently available and working firm. Crew changes too are becoming an issue once again, as the Omicron Covid-10 variant sweeps the world and ports (globally) are gradually closing their borders for international travel / crew changes / foreign crews arriving for take over. Lastly, the Turkish market was the only one, where, despite a collapsing Lira and a minor downward adjustment in import steel, the Aliaga market overall remained cautiously steady this week. Taking all of the above into account, it may therefore be a quieter end to the year in the recycling markets and all will be hoping for a rejuvenated appetite to buy, in addition to firming prices, as 2022 comes around”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

Recent Videos

Hellenic Shipping News Worldwide Online Daily Newspaper on Hellenic and International Shipping