Home / Shipping News / Hellenic Shipping News / Demolition Market in Disarray

Demolition Market in Disarray

The ship demolition market appears to be in disarray, with prices collapsing. In its latest weekly report, shipbroker Clarkson Platou Hellas commented that “the recycling market has taken a disastrous turn for the worse this week on the back of a distinct lack of faith in the industry in Bangladesh. Price levels from the Bangladeshi domestic market collapsed this week as cheap imports of the domestic mills took stock of cheap finished products from China, contributing to a major correction for ship scrap. The import of finished scrap is now considerably lower than importing ships for recycling and hence, demand locally for ship scrap has drifted away. As such, the Bangladesh Ship Breaking Association issued an ultimatum for yards to immediately put a halt to the selling of their inventories to the steel mills in an effort to eradicate the current negative sentiment/pricing. Therefore, this market is to be considered closed for the time being as the local recyclers have stressed that they will not be offering for any tonnage for the time being”.

Source: Clarkson Platou (Hellas) ltd

The shipbroker added that “elsewhere, Indian and Pakistan buyers have demand but here to, price levels have reduced of recent times and with the monsoon rains now affecting the Indian sub-Continent, all markets look set to remain dormant for the next couple of months at least. The general feeling is that there will be little demand or activity from all three destinations until after the monsoon season, when maybe, price levels are expected to rebound. As we approach halfway through the year, recycling activity has been limited, with 201 units of 4.6m GT reported sold for recycling, down 27% y-o-y on an annualised basis”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate note this week, GMS , the world’s leading cash buyer of ships said that “the degraded performance across the ship recycling sector over the last few (and painful) months shows few signs of abating just yet, as it has been a veritable tale of misery, even though prices remain at some of the firmest levels we have seen over the last decade. Down from the peaks of $700/Ton, levels nearly USD 100/LDT lower have left a bad taste in most mouths in the industry. Certainly, the last time prices crashed from the psychological USD 700/LDT barrier was back in 2008, when even USD 800/LDT was briefly breached during the unprecedented boom years of the shipping industry, prior to the global financial collapse in September of that year. However, not for a while have we seen freight rates at such optimistic numbers, as all sectors (Dry Bulk, Tankers and Containers) continue to fly, giving a healthy collection of these aging ladies, an extended chance at life in their respective global trading fleets.

Source: GMS,Inc.

As such, it remains a bit of a conundrum for the ship recycling sector, while candidates remain sparse and their incoming volume unlikely to pick up any time soon, even with prices having declined by over USD 100/LDT and having left sentiments on the ground in pieces, levels of over USD 600/Ton seems insufficient to tempt vessels towards the shores of recycling. Steel prices have actually recovered a little in Pakistan, as they stabilize in India to an extent, ending the week at levels similar to those at the beginning of the week. However, it is the currency that continues to afflict Recyclers globally and this is leading to an overall lack of confidence in offering afresh on tonnage. Perhaps a period on the sidelines could reinvigorate sub-continent markets and bring demand back, of course, once steel prices and currencies settle at an acceptable level. On the far end, Turkey manages to finally wrest the unending slide of nearly 6+ weeks that has seen levels plummet about USD 250/MT, as both import and local steel plate prices record improvements of their own”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

Recent Videos

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