Robust Demolition Activity Indicates Shipowners’ Willingness to Let Go of Older Tonnage
According to Clarkson Platou Hellas, “the second piece of interesting news to resurface, again something that has been openly talked about for several years, is the proposed opening of a ship recycling destination in South Africa, then plan of which is to create a Hong Kong Convention compliant ship recycling facility on its west coast. The site, to be called 34South, is intended to be located in the Saldanha Bay Industrial Development Zone, offering a location for those vessels ending their trading life in the vicinity. Reports suggest the facility will use a ship lifting system, ensuring that vessels are decommissioned in an environmentally safe manner compared to the beaching method widely used elsewhere. It will be interesting to see whether this new plan does actually materialise or if it is just another flash in the pan idea as seen in the past”, the shipbroker concluded.
Meanwhile, in a separate note, Allied Shipbroking said that “activity this past week was not so impressive compared to the overall activity we have been witnessing of late, but remained robust, while we do expect to remain at close to these levels for the final few months of the year. In Bangladesh, the rumors regarding a potential cartel taking shape amongst domestic breakers seems to have materialized, with breakers in the country wishing to avoid any further rally in offered prices taking shape right now. However, it is important to remember that the last time such an agreement was made in the country, it was dissolved relatively quickly due to the increased competition that emerged from other Indian Sub-Continent destinations. In India, activity seems to have started to follow a declining path due to weaker steel plate prices and concerns over the COVID-19 situation in the country that could potentially lead to a second lockdown taking place relatively soon. Finally, the ramp up noted in Pakistan as of late seems to still hold some steam, as interest remains vivid in the country. However, the available slots have been limited due to the previous spike in activity, trimming as such the number of fresh enquiries”.
In a separate report this past week, GMS (http://www.gmsinc.net/), the world’s leading cash buyer of ships, said that “the prominent news this week centered on the formation of yet another cartel in Bangladesh, which is another attempt by a handful of powerful local Recyclers to try and secure vessels at controlled, below market prices. Every few years, we see these attempts being made. Yet, all this does is reduce the competitiveness of the Bangladeshi market and the fallacy of it all sees the cartel break up in a very short period of time (within days, if not a few short weeks). Furthermore, with Pakistan and India remaining competitive, there is every chance that Bangladeshi buyers will likely lose any and all market tonnage to their sub-continent neighbors. Several VLOC sales in recent weeks have reportedly been concluded to Pakistani and Bangladeshi End Buyers and a majority of the most capable (in terms of L/C limits) and keen End Buyers are starting to (if not already) fill their plots with large LDT tonnage once again. India remains the HKC green destination of choice (with almost 80 HKC approved yards with NK, Rina, LR classification societies) and there is now a trickle of green deals every week to consider – especially as container candidates start to slow from many of the major liner owners amidst an uptick in charter rates.
Finally, key Turkish fundamentals recorded declines this week resulting in levels for ships slipping marginally”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide