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Ships’ demolition Market Picks Up

The ships’ demolition market has picked up pace over the course of the past week. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “this week has seen the market take off in all areas in the Indian Sub-continent, providing positive vibes emanating with further increased rates. Pakistan especially has jumped significantly this week giving a bonus to any Owner that is willing to dispose of any dry cargo unit, larger LDT bulkers in particular have been attracting aggressive and ground breaking levels. As we move towards the end of the year, encouraging signs can be seen that inquiry from all areas in the Sub-continent and remain upbeat although Bangladesh recyclers, despite being stable, look like they have reached their peak. It will now be interesting time to see whether the latest increased rates will draw more owners to look at the disposal of their older units with freight rates under slight pressure”.

In a separate note, Allied Shipbroking noted that “the week seemed to have suddenly jumped into a higher gear, with the intensifying appetite amongst shipbreakers in the Indian SubContinent quickly leading to higher competition for each and every demo candidate that came to market and a significant mark up in the offered price levels. Indian shipbreakers have been highly aggressive during this time frame, with the price indications increasing considerably week-on-week and overtaking the rest of the breakers in the region. It looks as though a fair amount of strength being seen in local steel plate prices has helped support this buying fever and possibly even provided room for some speculative buying to take place. For the time being it looks as though there may well be some positive momentum which could well help drive things further up over the coming days”.

Meanwhile, GMS, the world’s leading cash buyer said that “sales and speculation ramped up another notch this week as several extraordinarily highpriced deals were concluded (primarily) into the bullish Pakistani market. Of the vessels sold, Sinokor of South Korea have now fixed their sixth unit of the year (all concluded within the space of the last couple of months) as the Korean market has started to offload Capesize bulkers at a tremendous pace (due to the expiration of various government charters). Meanwhile, on the local markets front, on the back of the repeat tragedy onboard the FSU ACES a couple of weeks ago, the Pakistani market remains (seemingly indefinitely) closed for tankers. Moreover, the firming dry and container freight rates (of late) have in turn led to an excruciating dearth of potential units (especially when compared to the years gone by) from these sectors. Notwithstanding, fundamentals remain firm overall and we may well experience some buoyancy across all sub-continent markets as the year-end approaches – a time that has traditionally been an active period in the ship recycling industry as ship owners are looking to sell off their aging assets in order to balance their books. On the pricing front, there certainly seems to be a disconnect between the levels that Cash Buyers have concluded some of their recent fixtures, when compared to the reality on the ground i.e. levels offered by local Recyclers. Only time will tell whether such offerings will improve to the extent that profits are realized on some of these recently exaggerated sales. It remains a shame that the Chinese market remains essentially closed and the Turkish market remains relatively subdued as local steel prices, currencies and scrap fundamentals remain steady (especially in the sub-continent markets)”, GMS concluded in its weekly report.

Finally, shipbroker Intermodal said that “the surge in demolition prices that started only a few weeks ago as a small positive correction after a disappointing post summer period, has transformed into a strong rally in less than ten days, with average bids in the Indian subcontinent market settling well beyond $400/ldt for both dry bulk and tanker/container units. The high ldt units that were sold for scrap in the past days have certainly helped prices move up as fast as they have, while despite the fact that fast increases like that always hide a bit – or a lot- of speculation, the fact that breakers in all of Bangladesh, India and Pakistan have quickly – and generously – followed the upward trend, gives a bit of confidence in regards to how strong the legs of this rally are. With these prices offered in the region and the fact that we are quickly approaching the end of the year, we expect demo activity to remain at healthy levels as owners of vintage tonnage will surely be tempted to offload aging vessels for an admittedly decent return. Average prices this week for tankers were at around $230-430/ldt and dry bulk units received about $220-410/ldt”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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