Lack of Tonnage Still Plagues Ship Recycling Market

The ship recycling market has started 2022, right where it left 2021, i.e. in a constant “hunger” for more tonnage. In its latest weekly report, shipbroker Clarkson Platou Hellas noted that “as we enter the New Year, activity in the market has continued its slow progress from last year. However, we understand smaller units are starting to be circulated into the market place, so we will soon start to know the true ship values when these sales reach fruition. Supply of tonnage is expected to remain slow for the time being with no expectation of container units entering the fray and a limited supply of bulk carriers. Availability of tanker units could be limited also short term, but this could potentially be a busy year in relation to overaged tanker recycling”.

According to the shipbroker, “all recycling destinations in the Indian Sub. Continent are keen to acquire tonnage with an appetite to purchase, and this hunger could grow if the current lack of tonnage continues through January. Turkey have also opened the New year with aplomb and the feeling is that sentiment here to will increase into 2022. Unfortunately, reports of an explosion onboard a tanker that was being dismantled at a Chattogram recycling yard emanated from Bangladesh over the festive period. Reports suggest that the accident occurred onboard the 310,000 dwt ‘Jubilant’ with tragically, some fatalities and injuries. The Bangladesh Shipbreakers & Recyclers Association are reported to be in the process of issuing an ultimatum to cash buyers following several serious fires and an explosion on tankers that had been poorly cleaned of gas and oil residue prior to beaching. Further reports suggest the Association will issue a written warning to all-cash buyers who resell ships to recycling facilities at Chattogram, putting them on notice that they will be officially banned from doing business in the country if they are caught delivering vessels that have not been properly cleaned and made completely gas-free”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate weekly report, GMS , the world’s leading cash buyer of ships said that “2022 begins with Omicron sweeping across the world, as global markets come increasingly under pressure and in a state of stasis (with this most recent surge). Moreover, Recyclers remain unsure as whether to push on or retreat further from the declines seen over the last month. Supply does remain stifled, but there is the growing feeling that Recyclers are not showing their true hand and as such, are likely lowballing offers in the hopes of acquiring a bargain or two (especially in Chattogram). While on the one side, Bangladeshi steel plate prices have started to claw their way back and even remained steady for a couple of weeks now, on the other, the currency is stabilizing in Pakistan and Turkey (to an extent) and now that the festivities and holiday period is over, demand appears to be gradually firming back across the sub-continent markets.

Stability even prevailed in Turkey this week, with no noteworthy movements in steel being reported, while the Lira found a second week of stability in the mid-to-high TRY 13s. Additionally, with the marginal degree of vessel offerings still being unchanged, demand continues to persist from this market. As such, most Recyclers across the board remain keen to fill their plots, even though there is not enough tonnage going around and it seems unlikely to be a busy 2022 (as compared to last year), with Containers and Dry Bulk still flying and a feeling that the beleaguered Tanker sector may also turn at some point this year. Much may also depend on the severity of this recent Omicron wave and whether the surge in cases begins to restrict trade and movement – as we are currently seeing in parts of Asia where ‘as is’ take overs are at risk, international travel restrictions seem imminent, and infection rates skyrocket once again. In keeping with the feeble optimism with the turn of the year and as fundamentals overall remain positive, most in the industry are looking forward to another lift off (soon enough)”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide