Ship Recycling Market Starts Heating Up

After a long “hiatus” period, things are starting to heat up in the ship recycling market. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “increased optimism has returned to the market this week with various reports that the recyclers themselves have strong demand and desire to acquire any available unit that comes for sale, therefore the general feeling is that price indications should pull up once again. A slight reverse of the currency woes experienced in India is benefitting sentiment again on the waterfront at Alang as a currency appreciation is aiding improved indications”.

According to the shipbroker, “the dry bulk market had one of its best years last year with strong GDP growth globally underpinning demand across all sectors. Looking ahead, we anticipate stronger activity after Chinese New Year, with forecasts for Cape/Panamax rates set to improve again. Tankers are coming off one of the most difficult periods in their history as rates across all segments averaging below breakeven during 2021. Analysts suggest the outlook is quite promising as we look to the second half of 2022 and into 2023. The container market continues to be the strongest performing sector across all of the shipping angles with record rates continuing to support chartering activities.

Despite the recent short period of uncertainty, there is growing confidence of further stronger rates continuing into 2022. Newbuilding tankers scheduled for delivery in 2022 are nearly double the volumes scrapped in 2021, highlighting the urgency for ageing tonnage to be removed from the market to help bring supply and demand into balance. Therefore, the recycling markets look set to see supply originating from the tanker and offshore sectors, although tonnage could remain limited for the first quarter”, Clarkson Platou Hellas concluded.

Meanwhile, GMS , the world’s leading cash buyer of ships, said in its latest weekly report, that “recycling markets (especially in the sub-continent) seem poised for some positive movements this week, as both Cash Buyers and End Buyers seem increasingly willing to compete on any available tonnage. There have been several specialist units, Stainless Steel Tankers & Fish Factories – being the flavor of the recent supply into India of late – as both Pakistan and Bangladesh watch stranded on the sidelines, due to the ongoing paucity of vessels that has been suffocating the markets of late. Even the Turkish market endured a period of resilience this week, as all of the essential fundamentals remained in sync with last week’s levels, giving Aliaga Buyers the continued sense of stability that this market has endured of late. There are very few large LDT vessels in the market to discuss at present, especially as talks of a recovery in Tanker rates at some point this year continue to make the rounds and as Dry Bulk and Container rates continue to soar.

Indeed, those vessels that may have been scrap candidates not too long ago, are now seeking to pass surveys and continue trading for better returns – such is the state of the trading markets at present. There also seems to be a degree of optimism in the markets moving forward (both in terms of steel and currencies), hence the upward scramble in prices that is being witnessed of late,, especially when a vessel is introduced for a recycling sale. The overall preference does seem to be for smaller LDT vessels since the markets are indeed at historically highs and levels can fluctuate wildly from week-to-week. As such, we have not seen such positivity-&-demand for some months now as we are currently witnessing in the market. As the Chinese / Lunar new year holidays approach in the Far East, it may be a slower period in terms of supply for sub-continent markets, and this in turn may further lead to a firming of demand / prices.
Nikos Roussanoglou, Hellenic Shipping News Worldwide