Sluggish Ship Recycling Market The Norm

The ship recycling market has kept its sluggish pace of late. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the sluggish market continues with little activity or hope for some change in the pattern for the remainder of the year. Surprisingly, there was no ‘post’ Diwali boom and in fact, the Indian market opened with a concerning plummet in the domestic steel markets instead of the anticipated jump. Sentiments remained low this week despite the lack of tonnage as there is reportedly little demand locally for the finished steel.

Price of all grades of steel have dropped daily this week although some stability seems to have returned towards the approaching weekend which hopefully will bring a halt to the negative findings. With the elections set to take place in January, Bangladesh looks set to be the ‘bystanders’ as recyclers look to have little interest to acquire tonnage whilst the uncertainty of their forthcoming election remains, and the economic position is clearer thereafter. There are reports that the banks have informed their clients that they will not open any Letters of Credit until the New Year”, the shipbroker noted.

In a separate note, shipbroker Allied added that “Indian breakers return to business, but there has been no postDiwali rush of activity due to mixed signals in the steel market making buyers wary. Across the Indian Sub-continent, the market is little changed and accordingly places have remained flat and activity has ticked along at a fairly low level. Alang remains the prevailing market leader, picking up 2 bulkers and a tanker over the past week, and there is little reason to expect that this will change in the near term. Based on recent trends, Alang appear the most likely destination for the ‘MSC Rita’ as the liner continues to be the leading source of container tonnage, particularly when considering the greenrecycling requirements attached to the sale. In Bangladesh and Pakistan, buyers continue to await an easing of the LC difficulties, which appears to be on the horizon thanks to promising developments with the IMF. This could support a rise in sales to Gadani in particular, as buyers’ offers are competitive with Indian breakers and are just awaiting the access to dollars”.

In its latest weekly report, GMS (www.gmsinc.net), the world’s leading cash buyer of ships, said that “sub continent pricing and sentiments remain stranded in the low 500s/LDT and for certain units even below, as we meander aimlessly towards the end of the year with very little serious and enticing levels to induce either owners or cash buyers to sell. Of course LCs and available financing remain a big issue in both the Pakistan and Bangladesh markets, and there are only very tentative offers emanating as a result, on mostly smaller LDT vessels such is the precarious nature of their respective economies. Container and dry bulk markets continue to provide the still fairly limited supply of vessels for recycling, and one sale from each sector was concluded this week – probably for the more reliable shores of Alang (although the ‘as is’ vessel could end up anywhere if a particular buyer emerges).

The big news of the last few weeks has concerned the momentous announcement that the EU are considering once again to put select yards in Alang on to the approved EU list of recycling facilities – a big step given that there are so few approved EU facilities presently in Europe or elsewhere with sufficient capacity to take any serious tonnage. Bearing in mind all in the industry are expecting a bumper few years of sales ahead (with BIMCO stating they expect DOUBLE the recycling volumes in the next 10 years compared to the previous 10 years), this is indeed a welcome and important development. In other significant news, Pakistan has finally announced that it is now ready and seeking to ratify the Hong Kong Convention (HKC) in what will be a big step for yard owners there to finally upgrade their facilities in line with much improved Alang and Chittagong yards”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide