Demolition Rates Spike Yet Again, With Tankers Prime Candidates for More Scrapping

A lack of willingness to sell vintage tonnage has kept the demolition market in quite high levels, thus creating more financial impetus for more sales down the road, especially tankers. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “despite the quiet feel around the market, expectations are that we may about to witness a sudden influx of wet tonnage as price levels, particularly from India, are exploding into life once again. Usually, pre-Diwali (Diwali – 4th November) does see excitable recyclers who are keen to fix tonnage at this time of year, but we have seen an increase of about USD 30/ldt from the Indian market which may just bring more wet tonnage into the market. The Indian buyers have completely washed away their counterparts from Pakistan and Bangladesh and are now offering the larger numbers from this area, well in excess of the USD 600/ldt level, as evidenced by the sales collated below. The domestic finished products prices in India have risen over the last week aiding this sudden improvement from the recyclers, the question is will this just be a temporary increase or will the new levels continue ‘post-festivities’? News surfaced this week of China potentially cutting production and rising demand across the globe. If this does occur, then we can certainly expect to see ship recycling prices continue in its current strong force for some time”, Clarkson Platou Hellas concluded.

In a similar note, Allied Shipbroking added that “the moderate flow of units being sent for ship recycling resumed during this past week, with the tanker segment being once again the main feedstock. Two opposing dynamics are shaping the ship recycling market in the year so far. On the one hand, we see a very attractive pricing front with record offered price levels from scrapyards. On the other hand, we witness a very robust freight earnings for the dry bulk, container and gas carrier markets, which at the same time diminishes interest amongst owners for the for the option to retire any of their older aged tonnage.

It is expected that tankers and other secondary sectors will continue to be the main “staple” feedstock option for breakers until the end of the year. Robust steel prices in Bangladesh and Pakistan have helped maintain prices at very appealing levels and thus interest is anticipated to remain vivid for these countries. However, the recent currency depreciation in the latter has curbed activity somewhat. Finally, HKC recycling was once again the key driver for Indian scrapyards, with improved sentiment amongst domestic players increasing prospects for more businesses to take place in the final months of the year”, Allied said.

Meanwhile, GMS , the world’s leading cash buyer of ships said in its latest report that “after the recent brief lull, levels have spiked in the sub-continent once again last week, pushing above USD 600/LDT on most available units once again. The current diet consists primarily of tankers and offshore vessels, such has been the strength of the dry bulk and container sectors for much of this year. The volume of tonnage also seems to be increasing as we approach the end of the year, with many owners seeing these reinvigorated numbers (at and above USD 600/LDT) as the ideal opportunity to cash in and balance the books after another woeful year in the wet sector.

Local steel plate prices remain positively positioned across the sub-continent and even Turkey – the key driver behind this recent rise in rates – as futures are also displaying few signs of concern as we look set for a busy end to the year. The currency had endured some worrying moments in Pakistan and especially in Turkey, whilst Indian steel plate prices enjoyed a rapid rise to put them in contention once again. However, the biggest news of the week came from Bangladesh and Turkey, where both markets surged this week. In Bangladesh, off the back of firming steel plate prices and after a period of decline that saw many local offers fall below USD 600/LDT, the markets saw price and demand come soaring back to the highest levels in the sub-continent once again. Even in Turkey, after last week’s impressive jump in import steel prices, local offerings finally caught up and the markets jumped to where all types of units will generally fetch over USD 300/MT this week”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide