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Demolition Market Crawls As the Year’s End Approaches

Activity is scarce in the demoliton market these past few weeks. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the slow movement towards the Christmas holidays continues with very few new ships being circulated into the market. Some stability seems to have returned to the industry as the lack of tonnage in circulation seems to be the only reasoning why the markets are not falling further. Price levels from the Indian recyclers looks like they have now bottomed out following the recent constant declines, however the price levels from Alang are now too far below those on offer from their counterparts from Bangladesh and Pakistan which would mean there will be little tonnage arriving to their waterfront in the future weeks. There has been a sale of a VLCC reported this week which at any other time, would enlighten the market, however questions are being raised as to whether the vessel will still find some purpose for further use instead of a reported recycling candidate, so time will tell as to whether the vessel arrives at a recycling yard in future months”, Clarkson Platou Hellas concluded.

Source: Clarkson Platou (Hellas) ltd

In a separate note, Allied Shipbroking said that “we seem to be in the midst of a mixed period for the ship recycling market, given some contrasting signs being noted in the market as of late. In Bangladesh, there is a feeling that the market is under stress, but this seems rather disconnected at this point, with the fair number of units being concluded for demo in the region (under relatively “strong” price levels at the same time for many of these).

Source: Allied Shipbroking

In Pakistan, activity is currently lagging well behind that noted by the Bangladeshi market, being greatly affected by the steep currency depreciation of Pakistani Rupee. In India, the uninspiring trajectory of local steel plate prices has significantly derailed the competitive advantage of local Buyers. Finally, in the Mediterranean, the Turkish demolition market is currently experiencing negative pressure, given both the softening in steel prices being noted as well as the continual devaluation of the Turkish Lira. It is yet to be seen, whether this bearish trend will further push local sentiment on the negative side”, the shipbroker noted.

Meanwhile, GMS , the world’s leading cash buyer of ships said this week that “sub-continent ship recycling markets (including Turkey) remained in a precarious position this week, with the recent decline in steel plate prices mixed in with the crushing depreciation of currencies that has led to a serious dearth in the global demand for tonnage. As a result, there have still not been any noteworthy sales at these new lower levels to justify some of the alarming news emanating from sub-continent markets, and it does seem that much of what we are hearing is far more dramatic than current realities on the ground. Steel plate prices in India have collapsed by over USD 60/LDT in recent weeks. Yet, sales of stainless-steel units (in particular) continue at ever impressive numbers to Alang Recyclers. This is likely because the non-ferrous market is comparatively more specialized and is somewhat insulated from the wider steel markets.

Source: GMS,Inc

On the currencies front, the Turkish Lira and the Pakistani Rupee have both depreciated to their (respective) highest ever levels against the U.S. Dollar – continuing an ongoing theme with the depreciations that we have seen for much of this year. Notwithstanding, the markets still saw several units reportedly sold to Gadani Recyclers from existing Cash Buyer inventories and at solid numbers to boot – those not too far from where Bangladesh currently is. Chattogram has seen a number of vessels arrive and beach over recent tides – including several larger LDT units / VLCCs / FSUs – and so it is perhaps understandable to see a weakening Bangladeshi demand as most Recyclers seek to monitor competing markets and re-adjust / lower their numbers accordingly, hoping to acquire a bargain or two. Overall, the overriding feeling is that fundamentals have not declined so dramatically in most of the sub-continent markets that justify some of the opportunistic and lower levels currently on show, and given a period of festivities / Christmas respite, we may see markets come roaring back as the industry heads into the New Year”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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