Demolition Market “Hotting Up”

The allure of even higher offers isn’t one to be ignored by many ship owners these days, when it comes to deciding whether to scrap their older ships or not. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “commodity markets rallied again this week, with Iron Ore trading as high as $230 per tonne, having broken through the $200 mark for the first time ever in the last seven days. These fundamentals have enabled the Global Steel markets to soar which has meant the local steel prices in the Indian sub-continent firming and leaving the distinct possibility that we could reach the USD 600/per ldt level! This would result in a huge milestone for the market and see levels not witnessed since the post 2008 financial crash. This makes the recovery even more impressive as the World starts to unlock after what has been the biggest and worst Economic shut down in history due to the Covid-19 Pandemic, where this time last year it ground the recycling industry to a halt. However, the ever-increasing cases in the three sub-continent locations has left Cash Buyers slightly susceptible of the short-term outlook, but there is a feeling that the worst of the wave has been felt and that June should see improvements as the May lockdown takes effect. Despite this, it is worth mentioning that the few vessels that have recently been concluded are still being delivered to the yards and the main obstacle in this climate has been the ‘as-is’ deliveries where the Port of Singapore currently remains shut for crew change with both the Sellers and Buyers looking for a mutually agreed alternative delivery locations. With the Eid celebrations now taking place, we expect a quieter week ahead in the industry and we would like to take this opportunity of wishing Eid Mubarak to all of you and your families”, Clarkson Platou Hellas noted.

Allied Shipbroking added that “A fair number of deals came to light this week, with most agreed prior to the pandemic restrictions imposed in India and Pakistan. The robust steel prices and the continuing pressure noted in earnings for some sectors such as that of tankers have helped keep both prices and activity at high levels. However, we have started to say a drop in the pace recently, pointing clearly to the effect that the recent closures have had on the market, as well as the Ramadan and Eid holidays. In Bangladesh, the stream of arrived units for demolition is intense, as local breakers are still competitive despite the problems created by the fresh upsurge in Covid-19 cases there.

Current offered prices and the fact that breakers have not halted operations, is expected to retain the high rate of enquiries over the coming weeks. In India, ship recycling activity has flat lined, with the countries focus having been diverted to the battles given in the country’s hospitals. However, favorable steel prices and strong Indian Rupee leaves some room for optimism moving forward. In Pakistan, the restart of business after the lifting of the most recent lockdown measures, helped interest to rebound. Firm prices and slot availability are the key advantage here and it is expected that demand will quickly ramp up, boosted by the very high steel prices now in view”, the shipbroker concluded.

Meanwhile, in a separate note, GMS , the world’s leading cash buyer of ships said that “this week, despite the rapidly escalating Covid-19 crisis across much of Asia, steel plate prices continue their upward trajectory once again for the second running week. Indeed, ship recycling yards in Alang and Gadani remain closed for the time being and as such, there remain lingering concerns that these recent spikes in steel may simply be artificially induced, due to a dearth of supply and with product unable to shift from local yards at the same time. There has been a steady stream of vessels sold pre-Eid holidays at improving levels, so it will be interesting to see whether this trend persists even after the holidays.

The end of Ramadan and the onset of the traditional Eid holidays has seen activity slow down a touch. Yet, demand remains strong going into the holiday season and fundamentals continue to firm. So, there is no reason why the present surge in ship recycling levels cannot be maintained as the summer / monsoon months approach. A majority of the units sold so far this year have been in the beleaguered tanker and offshore sectors, with hardly any containers and very few dry bulk vessels being sold, especially as charter markets continue to impress. On the Covid-91 front, India is struggling with over 400,000 cases and 4,000 deaths per day as this deadly second wave of the virus shows few signs of slowing and neighboring countries (Nepal in particular) share in the worsening crisis”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide