More Dry Bulk Tonnage Sold for Scrap

The fall in the dry bulk market has triggered an increased amount of sales of vintage bulkers, as more owners were incentivized to make moves in the demolition market. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as anticipated, the sudden drop in the dry freight market has paved the way for more dry bulk units to circulate into the marketplace. There are some more capesize bulk carriers that have been reported sold this week, the question is whether they do finally arrive to the recycling yard or if indeed, the cash buyers attempt to trade further. Time will tell if we see them arrive at a recycling destination in due course. Price levels are moving upwards and it would appear that some higher L/C’s are being approved by the banks in Bangladesh. Although it does appear that this is purely on a case-by-case scenario. More ‘as is’ transactions are taking place which is most likely to avoid any hazard for the ship owner should the vessel arrive to Chattogram and a Letter of Credit is not approved/opened. Thus, again more risk is attached to the cash buyer. India continues to look like the most stable destination in the Indian sub-Continent and Pakistan continue to suffer tremendously from their current flooding for which, our thoughts and prayers go to all those that are being affected. There are even reports of some yards being washed away and therefore, little activity to this area is expected”.

In a separate note, Allied Shipbroking added that “the ship recycling market is trying to escape from the uninspiring trajectory that has been trapped in for some time now. Demolition activity managed to gain a slight positive momentum this week, which is reflected in the number of sales reported. Taking into account this activity, we can see that the negative pressure recorded in the dry bulk freight market has acted as a main contributor in increasing the number of the demo candidates coming to market and especially in the bigger size segments, with owners having started to take a more serious look of late at the option of retiring their old tonnage.

Taking a look at the different ship recycling destinations, we witnessed a stable stance from end breakers in terms of their offered scrap price levels as of the last couple weeks or so with Bangladesh still operating under the LCs restrictions and India and Pakistan trying to recover from the injurious and costly floods that took place over the past month. In Turkey, things remain extremely subdued with local steel prices and the Turkish lira still being under considerable negative pressure”.

Meanwhile, GMS , the world’s leading cash buyer of ships said that “following the sale of Capesize bulkers for recycling last week, the trend has continued this week as well, with further transactions reportedly taking place on units – including Capes and a Suezmax tanker, as the market finally shows signs of life after an absolutely inert summer. All of the major Ship Recycling destinations are still poised rather precariously, and Pakistan has seen some further depreciations on the currency towards the end of this week, whilst the country continues to battle floods, shortage of essentials, and the increasing spread of water-borne diseases, as thousands have perished in the floodwaters. Bangladesh too remains somewhat tentative, with limits on higher dollar value L/Cs still in place, local steel plate prices that took a noteworthy dive this week, and a Taka that seems to have found its stable place this week.

India has experienced (marginally less) volatile moves on steel across the week and remains the safest destination to deliver at present. Following an incredibly quiet 3 – 4 months of inactivity, there are signs of demand gearing up across sub-continent locations as most plots lie nearly dormant. Lastly, the Turkish market faces its own dithers this week, with further declines on fundamentals that are burying sentiments even further into the rut. Overall, chartering markets have deprived recycling destinations of most tonnage, but Dry Bulk has recently started to cool off (particularly the Capesize Bulker sector), whilst Containers are also showing signs of softening, all while Tanker rates continue to shoot onwards and upwards. It should hopefully be a busier finish to the year, as Owners look to capitalize on these still firm levels, despite the USD +100/LDT fall we have seen since the peaks of earlier this year. Rates in and around USD 550 – USD 600/LDT are still incredibly firm, given the lows we had witnessed of USD 250/LDT or so, during the early stages of the Covid pandemic”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide