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Ships’ Recycling Market Heating Up

The demolition market remains rather lively, as more tonnage has been sold for scrap. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “after last week’s further strengthening in price levels, some in the industry were expecting a small correction to follow, which thankfully so far has come to no avail. This is despite a wavering attitude in Bangladesh and global steel prices coming off ever so slightly, but as seen so far this year, these could rebound just as rapidly highlighting the steel markets volatility. We are still seeing strong demand across the sub-continent, evidenced by some high value tonnage negotiated alongside ‘off-market’ tonnage concluded, with cash buyers seemingly eager for more. Therefore, the outlook for the foreseeable future looks promising and one in which could get stakeholders more excited so long as we start to see attractive units proposed for the end recyclers. Interestingly, in the short term, tanker rates are further moving north as the market starts to show strong signs of recovery, which has come from the resurgent Oil consumption in Europe and the U.S., aided by the vaccination rollout which is slowly helping the Global economy recover. We also expect Opec+ to further ramp up its output as it starts to meet demand. This could further dampen supply which is already short, but will however maintain prices levels as Buyers look to remain competitive to secure any tonnage that does fall through the net into the recycling market”.

Source: Clarkson PLC

In a separate note, Allied Shipbroking said that “it was a week with a fair number of units being sent for demolition, with tankers, as expected, being the key focus once again. Despite that we are within the monsoon period, activity in the Indian SubContinent seems to have not slow-down significantly. We expect interest to remain vivid in the coming weeks, but in the case that a robust rebound is noted in the tanker markets, this could act as a dampener as the number of demo candidates would start to significantly dwindle. In Bangladesh, enquiries increased during the course of the past week, as offered prices remain at very attractive levels for yet another week.

Source: Allied Shipbroking

Many slots have been filled now, at a period were steel prices have started to lose some ground. As a result, it will be of little surprise if we see some of this interest to be diverted to other regions. Meanwhile, activity looks to have returned in India after a prolong period in which the ship breakers were at a complete halt. The “hungry” local scrapyards are expected to try and attract more and more units in the coming weeks, nourished by the overall improved local steel prices. Finally, a slowdown was seen in Pakistan this past week, after an impressive couple of weeks. However, interest remains strong and thus we expect more deals to emerge in the coming days”.

Meanwhile, GMS , the world’s largest cash buyer said that “all fiscal budgets in the Indian sub-continent markets have been announced in the past month or so, without any duties / taxes being levied on their respective domestic ship recycling sectors, and this has left all areas positively positioned moving into the summer / monsoon months. Of late, a marginal slowdown in the flow of fresh tonnage has given the sub-continent markets a bit of a breather, to regain their appetite and momentum ahead of a renewed push, at ever increasing and impressive numbers. Levels well into the USD 500s/LDT seem here to stay across the sub-continent markets for the time-being and for the foreseeable future as well, especially as steel plate prices remain relatively firm across the board and demand remains strong for any available units (mostly in the tanker and offshore categories). Finally, the Turkish market remains steady, with a marginal decline in imported steel reported this week.

Source: GMS

Yet, levels and demand, both hold firm. The Covid-19 situation continues to cause concern, particularly in India, although case numbers and fatality rates have finally been declining over consecutive weeks, where the government is doing its best to curb the spread. In other parts of the world, particularly the UK and the U.S., where they have accelerated their vaccine programs & are moving towards reopening in order to build herd immunity, other countries across the globe need to follow suit in order to try and get back to some form of normality before the end of the year”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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