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Pandemic Waves Having an Adverse Effect on the Demolition Market

The raging of the pandemic in India and the Southeast of Asia in general is beginning to take its toll in the demolition market as well.
In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the Pandemic continues to plague the Indian sub. Continent as more restrictions have been put in place which will limit labour locally. Bangladesh installed a week-long countrywide lockdown this week until 11th April whereby all domestic flights and other travel services have been suspended. At present, the ship recycling yards are operating at full capacity but there is a wait and see attitude now being adopted to see whether any further measures will be introduced in the coming weeks which may halt proceedings in this sector. The rates of infections in India continues to rise daily and creating some severe pressure to the medical profession”.

Source: Clarkson PLC

The shipbroker added that ‘taking this into consideration, the Government announced this week that oxygen suppliers are to prioritise the hospitals. Therefore, the Government instructed suppliers to equip them with 70% Gas for medical use and only 30% to be allocated for industrial use. There is also a night curfew in Bhavnagar from 2000 hrs to 0600 hrs until further notice, thus the ship recycling production/cutting will slow down. In hindsight, the lack of tonnage destined for Alang remains low which will help during this current difficult period. The lack of tonnage being circulated continued this week., however the price levels are not increasing but are remaining stable. Most likely, the unpredictable nature of the pandemic which continues to bite locally is hampering any positive moods in the recyclers’ sentiment”, Clarkson Platou Hellas noted.

In a separate note, Allied Shipbroking added that “this was another week with movement restrictions due to the renewed wave of COVID-19 cases in the Indian Sub-Continent. In Bangladesh, the local government announced the extension of the lockdown period for another week, while the Ramadan season is approaching. These facts are likely to curb action further in the country over the short-term, during a period though were local scrapyards are offering the most attractive prices. In India, the pandemic has also created serious problems in the country, with fresh restrictions in mobility being announced. Additionally, the weak Indian Rupee trimmed interest further this past week. In Pakistan, the local scrapyards are trying to attract some of the demand in the region, during a period were steel prices and the Pakistani Rupee are still robust. However, it is worth mentioning here that despite the recent drop in activity due to the pandemic situation in the Indian SubContinent, the total activity noted during the first quarter of the year is estimated to have increased compared to 2020. Approximately 46 dry bulk units and 23 tankers haven been scrapped in the year so far, compared to 44 dry bulkers and 11 tankers scrapped last year”.

Source: Allied Shipbroking

Meanwhile, GMS , the world’s leading cash buyer of ships said this week that “the nationwide lockdown in Bangladesh has been extended until the evening of April 13th as Covid-19 cases continue to worryingly escalate in the country, whilst Bhavnagar on the other side has also imposed a curfew of its own, following the lockdown imposed in the state of Maharashtra (where Mumbai is) last week, possibly affecting the international departures of incoming crew. Getting vaccines administered to the bulk of the population across the sub-continent could not come quickly enough as ICU units are starting to fill up once again as cases continue to rise exponentially. Parts of Europe are similarly facing a grim predicament of their own, just as the U.K. and the U.S. start to open up parts of the economy again, following successful vaccine rollouts in these respective nations.

Source: GMS

Notwithstanding, recycling markets remain well-positioned, even if ship deliveries and beachings could be delayed due to the recently imposed lockdowns in Bangladesh and India. There remains a paucity of units for sale and demand is starting to ramp up once again, especially in Pakistan, which has lost a majority of the larger LDT units that have been committed for recycling so far this year, to their Chattogram competitors. If the lockdowns persist for several more weeks, this will lead to steel stockpiling on yards as End Buyers are unable to shift their product and this may in turn lead to a downturn in prices. For the time being however, levels and demand continue to hold at these impressive numbers in the mid-to-high USD 400s/LDT”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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