What’s Next for the Demolition Market, After a Summer of Record Prices?
In a separate note, Allied Shipbroking said this week that “an overall stable week for the ship recycling market took place, given the relatively modest flow of demo candidates and the strong offered scrap price levels. In the Indian Sub-Continent, Bangladesh remains the leading market on year-to-date basis, having secured a strong share of the larger ldt units, mostly from the tanker sector. Hopefully, with the closing of the monsoon season, we will see a stronger pace in steel prices and activity levels take place.
Pakistan, having lagged slightly behind during the most part, have been seemingly more conservative in their approach, unwilling as of yet to surpass the US$ 600/ldt mark. Notwithstanding this, expectations are for a firmer final quarter. Finally, India still remains far behind the rest of the Indian Sub-Continent, still heavily relying on HK units to feed its market share. However it will be interesting to see how the market will react over the next couple of months, with local steel prices still seemingly holding at firm levels”, Allied said.
Meanwhile, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said that “far from being the traditionally quieter summer / monsoon months, July and August have passed with marginally weaker, albeit (still) record numbers above USD 600/Ton and deals still being concluded, particularly in the beleaguered tanker and offshore sectors! There has been a minimal supply of tonnage from dry bulk and container owners, with the so-called ‘super cycle’ for both sectors still in full swing. Shipowners have been looking to cash in on their ‘older’ & ‘survey-due’ inventory, and in many cases, recycling prices have actually been surpassing secondhand levels in recent times, making the decision to scrap, relatively easy.
There had been a slight wobble in the Bangladeshi market, with a USD 30/LDT correction in steel prices. Nevertheless, rates remain firm going into the final month of Q3 and there is plenty of capacity at sub-continent yards as hungry Recyclers look to take tonnage amidst the recent slowdown in supply. Vaccines continue their rollout at pace across the sub-continent and many are hoping that the worst of Covid-19 has now passed, having seen horrific caseloads and fatalities earlier in the year. Moreover, the spread of the even more contagious Delta variant is keeping concerns elevated, as most countries still have restrictions on incoming Indian crew or even sending their international crew to India and face possible delays during repatriation. Overall, prospects for the industry moving forward do remain stable to positive, as steel plate prices are the key driver for much of the bullishness, with China recently having announced that they will no longer export steel to the sub-continent markets”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide