Ship Recycling Market in Turmoil
Similarly, Allied Shipbroking said that “the ship recycling market’s overview remains discouraging for yet another week, as the higher earnings noted by owners do not meet inline with the conditions felt by breakers, including the depreciation in local currencies, the low demand for steel as well as the dampened demand due to the gradual onset of the monsoon season. At the same time, inventories amongst shipbreakers are running low, pressuring breakers to more heavily compete on the few demo candidates that come to market, keeping some positive support on offered price levels for now. In Bangladesh, the heavy rainfall noted has further dampened an already strained market this week.
Yet despite this we were able to see some activity emerge. In India, market activity has been dormant for now, leading to discussions about lifting the steel export duty to improve market conditions. A similar situation was seen in Pakistan, although saw an improvement was seen in terms of its local currency, something that could lead to local breakers there taking a more competitive stance over the coming days. Finally, the Turkey seemed to have been in complete collapse, with offered prices taking a considerable tumble under the strain of the negative market conditions at play.
Meanwhile, in a separate note this week, GMS , the world’s leading cash buyer of ships, said that “all of the major global recycling markets remain in turmoil for yet another week, with very few offers forthcoming (matching the near invisible number of units currently available for recycling), in addition to an utter lack of confidence from Recyclers across all locations that any sort of recovery is quite clearly not in the ropes anytime soon. There is the ongoing excruciating reminder that there are virtually no candidates to work on, as most Ship Owners are abstaining from recycling vessels from their aging fleets that have surprisingly found profitable chartering businesses across their respective sectors.
For those Owners with absolutely no other option on their near recycling-age units, other than a costly drydock & BWTS installations to consider, it would be a rude and jarring awakening to the fact that the sub-continent markets have tumbled well below USD 600/LDT, and as such, offers beginning with USD 5XXs/LDT should now be considered the new norm. This is an astonishing fall from the exceptional numbers seen recently that were well in-excess of USD 700/LDT and that too only a few short months ago – certainly a well-timed achievement for the (lucky) few Ship Owners who managed to conclude their units at these remarkable levels. On the West end, Turkey seems to be the hardest hit with steel plate prices (import and local steel) continuing their nosedive into the abyss, with vessel prices being the hardest hit. Notwithstanding, as vessels of 20 (and even 25) years of age continue to trade and make money, there seems even less of a need for experienced Cash Buyers to panic, as there is certainly the opportunity to do a quick run (or two) on these aging units, just to ensure they break even on the deal. As such, it certainly seems destined to be a noticeably muted summer / monsoon season ahead, with all markets deprived of tonnage, a monsoon season that is already hammering Chattogram, and collapsing fundamentals contributing to the near comical state of affairs, especially as this new reality on lower prices starts to bite.
Nikos Roussanoglou, Hellenic Shipping News Worldwide