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Ship Recycling Markets a Mixed Bag

The ship recycling market has been a mixed bag over the past week. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “in the ship recycling sector, different regions are grappling with their unique market conditions. India is currently in a downturn with reduced demand for ship steel scrap, but there’s optimism for a rebound post-Eid, in line with historical trends that often see a revival after major festivals. In Bangladesh, the market remains stagnant with a slight decrease in local steel prices, and recycling activities are expected to halt temporarily during the Eid celebrations, likely leading to continued slow market conditions until early July. Pakistan’s market is adjusting to fiscal policy changes that have removed tax exemptions and abolished an 18% sales tax on scrap sales, with industry stakeholders evaluating the potential long-term impacts”.

Source: Best Oasis

“Similarly, Turkiye is experiencing a market slowdown as the upcoming holiday week is anticipated to dampen activity, reflecting the typical ups and downs associated with regional holidays and their effects on industrial operations. Priya Blue Industries Pvt. Ltd. is among the key stakeholders expected to participate in a critical meeting scheduled on June 20, 2024, at the Gujarat Maritime Board’s (GMB) Head Office. This meeting is part of preparations for a forthcoming visit by the European Ship Recycling Association (ESCA) and a delegation from the European Parliament’s Environment Committee. The visit, planned for January or February 2025, will assess whether Indian shipyards, including those upgraded by GMB to meet EU standards, align with international environmental regulations. The Indian ship recycling industry is projected to achieve a 15% revenue growth this fiscal year, as per CRISIL Ratings, rebounding after two years of decline. This growth is driven by an increased supply of ageing vessels due to global expansions in ship capacity, and India’s competitive advantage over Bangladesh and Pakistan. Lower freight rates will make older ships economically unviable, leading to more being decommissioned for recycling. Indian recyclers, favoured for their efficiency, are expected to see a 20-23% increase in volume, with stable cash flows and healthy credit profiles supported by solid operational and financial foundations”, Best Oasis said.

Meanwhile, in India, “the market is currently experiencing a downturn, with notably low demand. Cheaper steel scrap alternatives from other sources are available, leading to decreased interest in ship steel scrap. Positive momentum in demand is anticipated after Eid, based on historical trends of market revival following major festive periods. India is expected to maintain its position as the fastest-growing economy in the AsiaPacific region in 2024, propelled by strong domestic momentum. According to a leading ratings agency, India showcased significant growth in the first half of the year. This upward trajectory is anticipated to surpass pre-COVID growth figures, fuelled by increased exports, robust local demand, and extensive government spending on infrastructure”.

Source: Banchero Costa

In a separate report this week, shipbroker Banchero Costa noted that “despite some volatility in local steel plate price and currencies across the sub-continent markets, interesting tonnage is still achieving firm prices. As an MSC controlled container Vessel namely the ‘MSC TIA II’ (10,478 LDT) blt 1999 Poland achieved a firm USD 570/LT LDT for strictly HKC only recycling on a delivered basis, in contract we reported in January this year from same Owners, the MSC JEMIMA (12,677 LDT) at USD 525/LT LDT. While it is expected to be a quieter week with the Eid holidays upon us we note there has been an increase in older tanker tonnage, mainly those ships with a more ‘colourful’ trading history being discussed for demolition on private terms. This follows the recent sale of the former Sovcomflot Aframax last week, the 1999 blt MT SERANO II (abt 106k DWT / 16290 LDT) which was sold into Banglasesh for a price in the region USD 520 LT/LDT”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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