Alack of available tonnage has continued to hinder demolition activity across the Southeast Asia region. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with Diwali celebrations in full swing this week, observants in the industry were taking this period to spend time with their families without the interruption of tonnage circulation. It was an especially poignant one this year with the UK announcing yet another Prime Minister (its 3rd one this year alone), with Rishi Sunak being the first Asian leader of the house of commons, making it a particularly special coincidence. It’s hoped that he will now provide some much-needed stability to the home economy and this will help support what is wildly a chaotic global state of monetary affairs. Many of the industry players have been returning home, after last weeks aforementioned Tradewinds ship recycling conference, which has initially been felt was a success due to the collection of stakeholders debating and discussing the market together, after the covid pandemic. However, activity has not picked up since then due to the firm freight markets across all sectors and the remainder of the year looks set to be just as quiet and close on what will likely be the quietest on record… Despite murmurings in the local market of a steel price drop, there should still be demand from the steel mills and this will help enable a firm pillar for the market in India and Bangladesh, with the former being the most stable of the three major recycling destinations. It is anticipated that Steel plate prices for ships in the foreseeable future ships shouldn’t be able to drop significantly, with such an empty menu of tonnage for Buyers to choose from”, the shipbroker concluded.
In a separate note, Allied Shipbroking added that “the ship recycling market has been holding within uninspiring territory for some time now, something quite evident when looking at the lacking momentum being noted in terms of transactions. Moreover, as we witness further widening gaps between price ideas amongst End Buyers, Cash Buyers and Owners, the market will likely remain firmly in a state of disarray for the upcoming period. Being more specific across the separate core demo destinations, in Bangladesh, things remained rather stagnant, with most local buyers seemingly unable to compete at relatively “workable” levels. Current steel plate prices and currency levels, coupled with the still restrictive L/C levels that are placed in the market, have created poor conditions for any quick recovery at this point. In Pakistan, activity also appeared relatively sluggish as well, with the effective spread in scrap price levels leaving limited room for a more sustainable flow of deals to take shape. Finally, in India, amidst the Diwali holidays, things remained fairly quiet yet again”.
Meanwhile, GMS (www.gmsinc.net), added that “activity and action remain sparse across all recycling destinations, with very few (market) sales to speak of, including minimal firm interest or serious numbers from End Buyers that may tempt Owners / Cash Buyers to engage in any meaningful negotiations. Fundamentals, which remain the primary driving factors of the ongoing volatility, remain precariously poised across all locations, with steel prices volatile / down and currencies still struggling to find stable footing. As a result, a sort of two tier market has emerged, one where Cash Buyers, Brokers and Owners expect the market to be at a certain level, and another where Local Recyclers seem to be intentionally positioning prices well below asking levels, and both are about USD 50/LDT apart at this time. Only on select and favored tonnage, like Russian built tankers or smaller LDT specialized units in decent condition are welcomed with acceptable numbers from the markets, particularly from a picky Bangladesh. Standard Handy, Panamax Bulk Carriers, and Capes are seeing prices in the mid USD 550s/LDT (if at all), as the number of End Buyers with the ability to establish workable L/Cs across the sub-continent continues to dwindle. Diwali holidays in India have afforded the market there a break, but the persistent inertia evident in Pakistan and Bangladesh has become a prolonged malaise and is not giving Cash Buyers any confidence to offer on any of the small number of candidates available for recycling, instead preferring the far more bullish trading sector as a viable alternative”, GMS concluded.
