Ships’ Demolition Market Facing the Doldrums

Among other subsegments of the shipping market, one of the most heavily impacted by the current lockdown situation in many countries around the world, is the demolition segment. In its latest weekly market report, shipbroker Clarkson Platou Hellas said that “with the Indian sub-continent having endured its first full week of lockdown, it is now an extremely difficult and unknown time for the industry with tonnage still arriving at the delivery anchorage unable to commence their custom formalities to gain inward clearances into the destinations as the port closures remain in force, and Bangladesh extending their lockdown further till the 12th April. This has placed both the Owners and cash buyers in very difficult and challenging positions with reportedly some cash buyers commencing ‘Force Majeure’ claims. It leaves the delivery of many vessels in the balance and with everyone’s eyes very much fixed on the Indian, Bangladeshi and Pakistani Governments on whether they will further extend their current bans on the importing of ships for recycling or allow activities locally to resume”.

The shipbroker added that “surely, there must be a case to consider the well being of the crew onboard and that import and beaching of vessels can once again begin to kickstart their local economies and just place crew in quarantine, if required once they have disembarked from the vessel. While the waterfront remains closed, it is almost impossible to be able to give any real or accurate price guidance on future tonnage which may come into the market. When the recycling yards return to any real operation, there is a clear conclusion that we will undoubtedly be at lower numbers than seen before the Covid-19 outbreak as the recycling yards will need to offload there inventories lying dormant from previously dismantled vessels whilst the steel mills have shut. This is also highlighted by there being not one sale for any type of ship across the major recycling destinations with Cash Buyers also now becoming very conservative as they cautiously manoeuvre themselves through these uncharted waters the market finds itself in”.

In a separate weekly note, GMS, the world’s leading cash buyer said that “all of the major recycling locations remain under lockdown for yet another week as the Coronavirus pandemic spreads across the globe. Italy, Spain and the U.S. of A. are the present hotspots as cases and deaths continue to rise at a rapid rate (especially in the United States), with the peak, perhaps, yet to be seen across parts of Europe and the Americas. There are certainly expected to be even more grim days and weeks ahead, as the world struggles and battles to get the virus under control and the race for a vaccine has taken on an ever more pressing priority, due to the number of people being infected and the ease at which Covid-19 continues to spread. Certainly, shipping markets have taken a back seat as all of this has unfolded with much of the world going into isolation / quarantine, in order to try and contain the pandemic. As a result, ships have been laid up and denied entry into all subcontinent recycling locations (at least until April 15th), when measures may well be extended further, if no significant progress is made. Markets will have to bounce back strongly once they eventually reopen, to allay fears of a serious and sustained recession and economic downturn. However, there is no telling when the increasingly imposed lockdown measures across the world will be relaxed and normal ship deliveries will resume once again”, GMS concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide