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Demolition Market Finding Some Footing as Wet Tonnage is Sold

With prices in the ship recycling market staying near record levels of well above $600/LT LDT, some owners, especially from the tanker segment were tempted to cash in. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “prices soared further again this week and caught Owners eyes as we finally saw a volume of Wet (including gas) units enter the market, across all sizes. This is what the market has been waiting for and is a break from tradition, seeing the summer months so active. Perhaps now we may see the market slowly returning to something resembling a vigorous period once again as more tonnage arrives to the market on the back of these firming price levels. There does however always seem to be something to soften the mood and this week, a sudden announcement was reported from Pakistan. With immediate effect, the Government (FBR – Federal Board of Revenue) have raised the minimum value of long steel products (including re-roll-able ship plate & other re-roll-able material obtained from ships) for ascertaining /calculating the sales tax. As such, an increase equivalent to about USD 60/ton on Sales Tax/ other taxes has been implemented. The local recyclers themselves are still digesting the news and working out what sort of price correction, if any, this will have on them”, the shipbroker said.

Source: Clarkson Platou (Hellas) ltd

In a separate note, Allied Shipbroking said that “a rather quiet week for the ship recycling market took place, with the typical sluggish mode during the peak of the summer period seemingly having heavily affected the flow of demo candidates. Despite the typical seasonal patterns, this comes partly as a surprise given the firm offered scrap price levels of late across all of the Indian Sub-Continent. Bangladesh seems to still be leading the way, being the first market having reached the US$ 600/LDT mark and still holding well above, a level which is one of the highest seen in the demolition market for many years now.

Source: Allied Shipbroking

At the same time, Pakistan witnessed a relatively steep upward push during the past few days, offering very close to these high levels, but lagging slightly behind once again. Finally, it won’t be so surprising if India starts to follow through closely in the near term, especially for specialized units, ramping up further the competition and generating even more excessive scrap price levels. All-in-all, a whole lot will depend on the stringer availability of demo tonnage that it is likely to emerge over the next month or so, especially from the dry bulk and container sectors”, Allied said.

Meanwhile, GMS (www.gmsinc.net), the world’s largest cash buyer of ships said in its weekly report that “prices across the Indian sub-continent ship recycling markets continue their impressive upward trajectory this week, as end Buyers press on for any availabletonnage, at levels well above USD 600/LT LDT, especially in the case of Bangladesh and a now firming Pakistani market. The summer months have brought with them a relative paucity of units, which is somewhat surprising given the record levels we are witnessing once again and the fact that the market has more than doubled in just the space of a year. Any supply of vessels is largely from the beleaguered Tanker and Offshore sectors, but there are still the odd Ropax / Passenger units and Reefers to talk of as well, that are being diverted primarily into India.

Source: GMS,Inc.

Dry Bulk and Container chartering markets have been flying for much of this year, so we have seen very few of these units being proposed for recycling, as Owners are now opting to pass surveys on vessels almost 30 years of age, as such have been the freight earnings in 2021. On the Covid-19 front, the Delta variant continues to increasingly cause concern across the globe, and the sub-continent has yet to reach a satisfactory level of vaccinations to begin reopening fully, just like the U.K., Israel, U.S.A. and various other Western nations have been. Even Turkey continues to battle fresh infections rates of over 22K fresh cases per day, but the situation there is still better than the sub-continent at present. Overall, despite lockdown restrictions remaining in place (especially across Bangladesh in particular), ship deliveries and beachings continue in all locations and port reports are seeing a trickle of vessels arrive over each tide”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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