Ship Recycling Market in Limbo
In a separate note this week, Allied Shipbroking adde that it was “another week characterized by quietness and poor sentiment among ship recyclers. Steel markets across ship recycling destinations are in different phases. In India, there is perhaps a sense that the market has bottomed out and that steel prices could begin to rise. If this is the case, Indian breakers could start to close the gap between their prices and those of their peers in the Indian Sub-Continent now that they have tumbled to the bottom of the table in terms of offerings. In Pakistan, there is a growing sense of optimism, as China has rolled over a substantial loan, further bolstering the country’s financial position following the recently announced IMF support.
There has yet to be a deal announced, but there is a sense that ship recyclers stand a chance of acquiring vessels for demolition if they can meet the high margin requirements for a L/C. There was slightly more positive news from Turkey, where the market has remained relatively stable thanks in part to a neutral week for the Lira. Despite weakening scrap steel prices, yards haven’t lowered prices and were able to acquire two small vessels from the 70s for recycling”, the shipbroker said.
Meanwhile, GMS, the world’s leading cash buyer of ships said this week that “recycling sentiments remain negative overall, and it seems to now be a declining market of one that’s frustratingly left with very few open Recyclers who are simply unwilling to offer realistically on the few vessels that are currently available in the market. Ravaging monsoon rains are the leading cause of the ongoing slowdown in the sub-continent as minimal cutting / recycling activities at yards is taking place and as such, the market is barely moving forward with the minor number of vessels being committed.
There is no question that Cash Buyers and Vessel Owners are unaccepting of some of the opportunistic offers being put out there and as such, we are witnessing something of a standoff on any number of unsold vessels at present. The one confirmed sale for the week saw a Sinokor controlled container that was committed for an extraordinary price into Bangladesh, but we would like to caution our readers that this is not a true reflection of current market conditions at all, and it increasingly seems to be that just one particularly hot Buyer who was able to arrange L/C limits / bank financing on a favored small LDT unit. Encouragingly, enquiries have been emerging from Pakistan as well, and it may take one or two confirmed sales and beachings to go through, what would inevitably (and eventually) establish a new direction for Cash Buyers and Gadani Recyclers, for clearing L/Cs & various other payment issues, especially having been out of the game for so long. India once again slips to the lowest placed of all sub-continent markets and as the supply of green ships and specialist units dries up, Alang Buyers are seeing minimal tonnage and new arrivals, as evident from this week’s local port position, which reported no fresh arrivals. Finally, the Turkish market remains suspended in no-man’s land (just like the sub-continent markets), with the Lira briefly breaching TRY 27 and no movement reported in steel prices”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide