Thursday, 27 February 2020 | 07:31
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Demolition Activity Below Par on Summer Lull

Friday, 02 August 2019 | 00:00

Another week, another sub par ship recycling activity in the market. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “the tropical and hot climate that has been experienced across Europe this week has further reminded everyone of the summer mood that we are experiencing in the market. The lack of tonnage supply to the market has resulted in little negotiating activity and thus, making it difficult to gauge where any ship value lies. It would appear, however, that Owners are not losing anything by not considering the recycling market for an old unit as reports today suggest that a further negative correction is now upon us, The domestic steel market in India has fallen sharply again this week, continuing the recent negative trajectory, and the latest fall equivalent to region USD 30/ldt for the past week, has taken indications below USD 400/ldt. With both the Bangladesh and Pakistan markets facing their own particular difficult issues, the long hot summer we are experiencing will mean that those connected to the recycling industry should have a quiet vacation period. We are now hearing that owners who initially had been inviting offers for certain units are temporising the sale due to the subdued numbers being tabled”.

In a separate note, Allied Shipbroking added that “the traditional summer lull seems to have taken complete control of the ship recycling market right now, with very few transactions coming to light during this past week. The most interesting sale noted these past days was the recycling of the VLCC “Hawath”, which was scrapped for a reported price of US$417 per LDT. Several bearish factors have diminished buying appetite in the Indian Sub-Continent. In Bangladesh, the upcoming Eid holidays, the monsoon period and the already fulfilled capacity has led more and more cash-buyers to retreat their interest. In addition to all these, the published 10% VAT on demolition transactions included in the recent budget determination has affected market conditions in the country as well. In India, the recent slump noted in local steel prices have cut any firm appetite that was seen amongst cash buyers in previous months. The only positive aspect right now is the stronger Indian Rupee, though this on its own seems to be insufficient to support demand right now. The deteriorating conditions being witnessed lately in the markets of its key competitors has helped Pakistan to regain some market share during these past few weeks, though it seems that even here things are about to soften further now”.

Meanwhile, in a separate note, GMS, the world’s leading cash buyer of ships said that “markets across the subcontinent continue to endure a rough ride over the summer months and there is virtually no good news over the recent past that would bring optimism back to the industry (at least until the monsoon's start winding down). Steel plate prices in India have declined by about USD 50/LDT over the course of July, leaving vessel prices positioned well below the USD 400/LDT mark – a precarious position for those Cash Buyers who are still stuck with (expensive) tonnage to sell. Bangladesh remains in the mire as well, with still no positive news forthcoming regarding the reversal of the 10% VAT imposed over the recent budget (something that has seen prices adjust downward by about USD 30/LDT). Most yards are still stuffed with tonnage and it may take several months over the traditionally quieter monsoon period, for vessels to be digested and local demand to return. Pakistan too has remained out of the buying, with cheap Iranian billet imports that are still putting pressure on local prices and a recent currency collapse, both of which have conspired to see very few vessels being committed to Gadani Buyers for nearly a year. Finally, the Turkish market continues to trudge along (unchanged), with a minor improvement reported in local steel prices, whilst the Lira continues to linger around the TRY 5.6X mark. In other news, we wonder if our readers are aware of the difference between recycling and responsible recycling? Do they appreciate the impact of various regulations such as the Hong Kong Convention and the European Union Ship Recycling Regulation to their bottom line? Does your company follow recycling methods geared towards CSR?”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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