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Demolition Market Still Under Lockdown

With shipping having to cope with extraordinary circumstances and challenges, due to the COVID-19, demolition of older ships have taken a back seat of late. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “to avoid confusion – market remains in lockown! Despite media interpretations and misleading reports this week, we feel the need to highlight again that the three Indian Sub-continent destinations remain in complete lockdown”.

Source: Clarkson Platou

According to Clarkson Platou Hellas, “to reiterate, the lockdown period for India is until May 3rd, Bangladesh extended further this week until May 5th and Pakistan remains at 30th April. It does appear that all three destinations appear to be looking towards each other for guidance as they seem to be taking the same direction once one area has made any decision. One thing for certain, their Governments will need to see a sustained period of falling virus rates before they can feel comfortable easing the strict measures currently in place. There has been a glimmer of hope however this week with news emanating from India that local authorities are allowing some limited cutting of those units that are already on the recycling yards. As aforementioned, the destinations remain in lockdown in relation to new arrivals, new custom inward clearances being given and new beachings being allowed, however we understand that 80 pct of the workforce are now being allowed onto those yards with tonnage already beached to start the cutting process. There does remain travel restrictions in place as the Interstate travel is restricted to essential travel only, however they are allowing a small movement of inventory to the local steel mills in the Gujarat state only. But the reports suggest that there is very little demand for the mills to acquire new steel for the time being as they have sufficient stock on site for the time being. As we have also now entered the holy period of Ramadan, the lack of activity and threats of further extensions to the lockdowns look set to result in the lacklustre atmosphere to continue into May”, the shipbroker concluded.

In a separate note, GMS, the world’s leading cash buyer said that “as the number of Covid-19 cases continues to rise across the globe, the expected / enforced lockdowns across all subcontinent markets have been further extended until May 4th at least. However, there have reportedly been some small concessions made in India this week, as a select number of local recycling yards that have been actively practicing social distancing and ensuring protective gear is being provided to yard workers, are now being permitted to commence cutting activities slowly and responsibly. This does not mean that India is open by a long shot as all flights are still grounded, foreigners are denied entry, and any vessels arriving Alang for recycling are not being permitted into port limits, with no boardings, beachings, and deliveries taking place yet. The expectation is that things are going to move at a slow and methodical pace (until the virus is brought under control) across all subcontinent locations & Turkey and lockdown measures could well be extended further, as with many parts of Europe and Asia, where shutdown / quarantine measures have been extended until June 1st. Finally, with the onset of Ramadan, countries celebrating the religious month are expected to remain out of the game for the most part, which may come hand-in-hand with the ongoing global quarantine and lack of any workable tonnage presently in the market”, GMS concluded.

Source: GMS

Allied Shipbroking added that “with the Indian Sub-Continent market still firmly closed, it is of little surprise that activity remained limited in the ship recycling market. During the last two weeks we saw some fresh transactions taking place, while the bulker M/V “HBIS SUNRISE” was agreed to be sent to Bangladesh for demolition under very strict conditions, including the retention of crew members on board. Things are not expected to change very soon, as lockdown measure are set to still hold in both Bangladesh and India, the two key demolition destinations, at least until 4th of May. It is worth mentioning though that few selected scrapyards in India are allowed to re-open under strict conditions, but without this meaning that we will have significant activity levels taking shape anytime soon. In Pakistan, activity and interest from cash-buyers were subdued even before the pandemic outburst, a fact that leaves little room for optimism under the current prevailing conditions. Finally, the fact that Ramadan period is approaching is another bearish factor for the demolition industry that should further dampen interest amongst breakers for a fair while”, the shipbroker concluded.

Source: Allied Shibroking

Nikos Roussanoglou, Hellenic Shipping News Worldwide

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