Lack of Available Tonnage Pushes Demolition Prices Past the $600/LDT point

The ships’ recycling market has been on the up lately, as a lack of vintage tonnage has prompted more price increases. In its latest weekly report, shipbroker Clarkson Platou Hellas commented that “with the Diwali festivities set for next week, the lack of tonnage is not helping the Indian recyclers to come forward with explosive offers and therefore, unfortunately, we look to enter next week on a very low-key sentiment. There is a lot of demand for steel in the Indian sub. Continent with many infrastructure projects in the pipeline and with steel at present not freely accessible, price levels should remain firm for the time being. The dry freight rates have shown some weaker signs, however certainly not sufficient to see some of these units enter the recycling market, therefore we will only continue to see tonnage proposed from the tanker, miscellaneous and offshore sectors for the time being”, the shipbroker said.

In a similar note this week, shipbroker Allied Shipbroking said that “a limited number of units were sent to be recycled during this past week, as the optimism dominating the dry bulk, containership and gas sectors has trimmed interest amongst owners to offload any of their higher vintage units. The tanker sector continues to be the key source of demolition candidates, given the persistently uninspiring fundamentals in the market. This trend though is likely to lose some steam in the coming weeks, as the first signs of a market recovery in this sector have started to take shape. It seems as though Bangladesh has been a bit less active as of late, despite the attractive offered price levels given.

However, it is expected that they will be able to capture further activity once the current stockpile has been processed, especially when given the level by which local steel prices have augmented of late. In India, a gradual improvement has been seen in terms of scrapping activity during the last few weeks, with the upcoming Diwali celebrations though likely to be a temporary pause for this market. In Pakistan, it was once again a quiet week, with breakers now expected to become more aggressive in the coming weeks as part of an attempt to attract more candidates”, Allied concluded.

Meanwhile, in a separate note, GMS , the world’s leading cash buyer of ships, said this week that “it has been another impressive week in the Indian sub-continent ship recycling markets as prices pushed on past USD 600/LDT (especially on certain decent spec vessels) and as the cobwebs from the September sub-continent lull seem to have been well and truly blown away at this time, prices seem likely to push on to their highest levels of the year thus far. On the Western end, the Turkish market had a bit of a counter re-adjustment this week, as import steel dropped by about USD 10/MT, whilst demand still remains strong, especially for deliveries in Q1 of 2022. It therefore looks increasingly set to be a frantic finale to the year as (particularly wet) owners look to cash in at the best levels seen in the recycling markets since the heady days of 2008. Overall, steel prices continue to impress across the board and currencies seem to have stabilized for the moment (despite some wobbles in Pakistan and some extreme ones in Turkey of late) and this has somehow led to some of the greater aggression and confidence to buy, as demand for ships ramp up in the fourth quarter of the year. There has, thus far, been a rather manageable supply of vessels for recyclers to digest and this has also contributed to some of the impressive numbers on show, especially with an increasingly fertile demand for available units.

With the recent uptick in deliveries now calmer over the last few weeks (see local port reports on Page 7), we are witnessing a gradually increasing availability of space at local yards to take in more vessels and despite the recent uptick in the supply of FSUs, Suezmaxes, Aframaxes, MRs, and stainless-steel chemical tankers, it is something of a surprise that not more tonnage has been delivered for recycling at these incredible levels”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide