Home / Shipping News / Hellenic Shipping News / Demolition Market Fired Up

Demolition Market Fired Up

Ships’ recycling activity has accelerated over the past couple of weeks, in what appears to be a long-awaited increase in sales of older vessels. In its latest weekly report GMS, the world’s leading cash buyer of ships, said that “activity has ramped up in the final month of the year, with several sales of diverse and some large LDT units registering across all sectors. All locations are now poised positively, with a firming demand and improving prices finally giving those Owners and Cash Buyers with tonnage to sell, some much-needed respite, especially after a disastrous fourth quarter that delivered some painful declines across nearly all of the recycling markets”.

“Notwithstanding, with freight rates still performing admirably, many Owners are waiting to see how the higher priced low Sulphur fuel costs from January 2020 will impact their OPEX. This has likely prevented the deluge of scrap tonnage that many had been anticipating as 2019 neared an end, from surfacing. Instead, we continue to see the ongoing trickle from the middle of the year to the far more steady (but manageable) supply we are now witnessing. Steel plate prices in India have improved by about USD 22/LDT over the last 4 weeks, whilst the Indian Rupee has firmed, settling from over Rs. 72 against the U.S. Dollar, to the mid Rs. 70s at the close of the week, in further encouraging developments on local fundamentals. Pakistan has also come back into the picture of late, with steel plate prices improving and the currency likewise settling in, after a shocking year of depreciation that saw over 20% of its value wiped off. However, the key issue in Pakistan – after almost a year and a half on the sidelines – is confidence, and End Buyers will need to seriously get back into the groove of buying, especially as many steel mills remain closed, yards remain empty, and the PSBA on hiatus. Bangladesh plate prices have actually endured turbulent fluctuations over the last few weeks, yet, demand for the right mid-sized units remains prevalent (given that most banks are unwilling to sanction L/Cs on the larger LDT units being proposed of late), whilst several End Buyers are still looking to fill their plots before the end of the year”, GMS concluded.

Meanwhile, in a separate note, shipbroker Allied Shipbroking noted that it was “a very good week for the ship recycling market, which finally seems to be showing some sort of bullish face, both in terms of activity and offered price levels. With demo candidates varying between different types and sizes, while seeing a number of candidates managing to fetch price levels very close to the 400 US$/ton, demand seems to be on an upward momentum for the main Indian Sub-Continent destinations. In India, both the improvement in local steel plates and in the local currency against the US Dollar, have helped things improve considerably. For Pakistani breakers, the story is more or less the same and stuck in a temporary limbo. For Bangladesh, things are now looking to be more fluid and volatile, with focus narrowed mostly to medium range units. Assuming that the demolition market is now set on a more stable trajectory as we approach the end of the year, a lot will depend on how realized earnings will evolve, especially when taking into consideration the upcoming regulatory changes that are set for next year”, Allied concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide

Recent Videos

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