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Ship Recycling Activity Slows Down Because of Asian Holidays

Ship recycling activity has taken a U-turn of late, with slowdown widely noticed as a result of various National holidays in the Asian region, predominantly China.

In its latest weeky report, shipbroker Clarkson Platou Hellas said that “with various National holidays in Asia this week including Golden week in China starting from today, there has been a significant slowdown in activity which is expected to continue during the whole of next week. Another factor has been the firming freight markets which continue to be fruitful for Owners, clearly resulting in a lack of workable candidates for the ship recycling sector. This means that price estimations are difficult to assess or be provided accurately and certainly more units are required in the market to test the waterfront and know where the market sentiment truly lies. The news last week concerning the newly established Cartel that was formed in Bangladesh to reduce the over aggressive rates being offered by cash buyers has snuffed the life out of the Bangladesh market and reports suggest that as of this week, no sales have yet been concluded through the cartel. The one sale that has been concluded into Bangladesh this week, as reported below, is for HKS Green recycling and as there is only one yard with this certification, the cartel was not involved. One sorry tale to remind the market of is the infamous Covid-19 outbreak which India continues to contain but despite this, the Government have said that they do not plan to impose any further draconian lockdowns which will be a welcome relief to yards just getting back to a full workforce. However, the main issue now is the lack of Oxygen bottles at the recycling yards which is slowing the dismantling procedures and therefore, slowing down the overall time for a vessel to be recycled”.

Source: Clarkson PLC

In a separate note, Allied Shipbroking said that “a rather uninspiring week for the ship recycling market, given the limited activity being noted right now. Moreover, the overall market seems to already show signs being under a fair amount of negative pressure and this only just after a relatively “strong” Q3 in which the market managed to recover considerably from its initial Covid-19 pandemic shock. Pakistan is still the ahead in the overall leaderboard, at least in terms of offered numbers. However, given the amassed tonnage capacity already in stock, as well as, the news of a some sort of “price control” in Bangladesh, this could add for some eventually pressure to take shape on the pricing front. Bangladesh saw no activity as of late, partially inline, with the attempt in putting a “ceiling” level on its offered prices, a key factor which led to the losing of its competitive advantage in the process. India lags behind the other two main competitors. However, they still seem to be holding to a fair market share for the time being, in part also helped by the need for green recycling options in the market. With all that being said, the upcoming months could well prove to be very volatile”, said Allied.

Source: Allied Shipbroking

In a separate report this week, GMS (http://www.gmsinc.net/), the world’s leading cash buyer of ships, said that “after a stunning surge in the third quarter of the year that saw much of the losses incurred due to the pandemic reversed, the markets appear increasingly set for an upcoming correction in the near future. Pakistan is rapidly starting to fill up and news has filtered through about the formation of a Cartel in Bangladesh that is looking to peg prices at an acceptable, profit-making level for End Buyers – or at least the powerful Local Buyers who have formed the Cartel. Prices are starting to settle back down into the mid USD 300s/LDT on most decent vessels once again and levels in India are in the neighborhood of USD 25 – USD 30/LDT lower than its sub-continent competitors – the expectation being that they may secure their share of generally better priced HKC green tonnage. In Turkey, steel plate prices also softened further this week (albeit marginally), yet vessel prices were reportedly unaffected since the only tonnage that seems to be working of late is units intended for EUSRR based green recycling, whilst the remaining majority of non-EU approved yards remain famished for tonnage. Covid-19 cases continue to afflict the sub-continent and India (in particular) has been recording upwards of 100,000 infections per day, as hospitals fill up and authorities struggle to bring the deadly disease under control. The news that President Trump has contracted the virus may also see further volatility enter the markets, as a second wave sweeps across parts of Europe and the U.S., ahead of what is expected to be a difficult winter season. Finally, vessel take overs at various ports across the globe are becoming increasingly challenging, with stringent quarantine and entry rules limiting all but a handful of locations for vessel deliveries”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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