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Ship Recycling Market Favorable for More Scrappings

With tonnage supply lacking, compared to demand, ship owners looking to scrap their older vessels, should be able to take advantage of favorable market conditions. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “all markets remain stable, especially now as the rates from Bangladesh have corrected back from the recent hikes to those on offer from their counterparts in India and Pakistan. The domestic steel prices weakened again this week in Bangladesh which has brought about this turnaround and the local recyclers are certainly not as aggressive when offering for available units. As such, recyclers will not be foolish, should a candidate become available, as demand is certainly outweighing the supply once again. Whilst it is difficult to see the USD 700/ldt being breached again (only a few units registered this), the lack of tonnage may tempt the recyclers to push onwards once again, although the forthcoming Ramadan (commencing this week), could potentially slow activity/sentiment throughout April”.

Source: Clarkson Platou (Hellas) ltd

In a separate note, shipbroker Allied commented that “Bangladesh has finally given away its top leaderboard position to India, whose prices are approaching and possibly expected to soon exceed the 700$/dt mark. What provokes this present slight market shift is the limited availability of demo candidates coupled by the sharp increase in domestic steel prices and demand. The main competition now is between the Indian and Pakistani markets, with the latter showing signs of resurgence taking advantage of slack noted from the side of Bangladesh. India held firm levels of buying interest and secured a fair amount of volume across various ship types. Bangladesh has been out of competition due to low domestic steel prices which have pushed even ships which are near to Bangladesh to head to India and Pakistan due to the improving sentiment and offered price levels there.

Source: Allied Shipbroking

However we can say that the ship recycling market is still following an overall unclear direction. The more difficult it is to predict the trajectory of steel prices and the demand levels either locally or globally in the short term, the more moderate the demand levels of ship-recyclers will appear. At first sight, we can say that apart from India which is actively trying to regain its momentum in the market, the rest of the demo buyers have adopted in their entirety a “wait and see” attitude as a result of the high volatility of raw material prices”, Allied concluded.

Meanwhile, GMS , the world’s leading cash buyer of ships said in its weekly report that “both Pakistani and (especially) Indian markets have come surging back this week, to lead the way over a lackluster Bangladesh that has virtually dropped out of contention of late. Firming steel plate prices in India have been the key driving factor behind this, and it still seems inevitable that the USD 700/LDT mark could be breached into these two markets, on upcoming sales in the near future (as long as these fundamentals hold). Pakistan has been on the sidelines of late, but appear to have woken up this week, in the face of some serious and sustained competition from a resurgent India and a Bangladeshi market that’s begun to slip in the rankings. Most of the losses on Indian steel plate prices have been made up over the last 3 – 4 weeks and the Alang market finishes this week in a rare position i.e. leading the market rankings ahead of all their sub-continent competitors, especially the usually pole-positioned Bangladesh.

Source: GMS,Inc.

Bangladeshi steel plate prices have been falling in recent weeks, and despite firming nearly USD 24/Ton by mid-week, the industry has seen them plummet from the summit to the bottom of the (sub-continent) rankings as their plate prices declined almost the same amount by the time the week ended. Furthermore, such a pricing reversal certainly sees them positioned uncompetitively on any market candidates for the time being – even on geographically positioned units in the Far East, which are now heading towards Indian and Pakistani shores. Finally, in the West, the Turkish market remains unchanged, firmly priced and positioned, with minimal tonnage to compete on. Overall, there has been some hesitancy to dip in at some of these historical highs approaching USD 700/LDT, across all sub-continent markets. However, due to continually impressive and improving steel prices that seem to have been performing well on the back of the ongoing Ukraine crisis, it’s a wonder how long these numbers will stay around”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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