Anoticeable lack of tonnage supply is keeping the ship recycling industry quiet. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as we approach the end of Ramadan and celebrations begin for the Eid festivities, it is noticeable how quiet the market has become. A lack of supply of tonnage is evident and interestingly, those new units that have been offered for sale this week are seeking HKC compliant recycling only. One such vessel is the woodchip carrier ‘Siam Ocean’, (details of the sale are below), owned by clients of MOL, which has been committed to the HKC green recycling yard in Bangladesh, a first for these Owners following their usual consideration of India only. This marks an important step for the Bangladeshi recyclers who have upgraded their yards to HKC compliancy and offers competition to the Indian HKC recycling yards”.
Similarly, Allied Shipbroking added that “the situation for breakers across the Indian Sub-Continent is not a happy one. The majority of vessels listed are those that have arrived at ship recycling locations, rather than being transactions noted during the past two weeks. While Bangladeshi breakers have taken a majority of vessels, the low average LDT of vessels is representative of negative direction the financing situation has taken there in recent weeks. Following several weeks of optimism, excellent prices and some sizable sales, the ease with which they can purchase vessels has reportedly worsened considerably.
India benefited from the MSC Pilar requirement for HKC recycling, despite the growing competition from the number of certified yards now found in Bangladesh. Perhaps this is a consequence of the relative stability of the market there, even if Indian prices are lower than what can hypothetically be achieved with their neighbour. Many will now be hoping for the end of Ramadan to mark the start of better fortunes in ship recycling markets”, Allied concluded.
Meanwhile, GMS (www.gmsinc.net), the world’s leading cash buyer of ships added that “the results of this most recent market decline have been on full display this week as those vessels previously sold at higher prices are now struggling to deliver in a U.S. Dollar starved Bangladesh (and Pakistan) and End Buyers are starting to (expectedly) create unnecessary turbulence at the waterfront, especially on those high-priced incoming units. Steel plate prices continue to dither across all markets (including Turkey) over the past month or so, leaving the various recycling destinations far more precariously poised than they were during the bullish start of the year. The key hurdle for Bangladeshi Recyclers (amidst the ongoing liquidity crunch in the country) is working with the Central Bank in getting fresh L/Cs approved, with all but essential items (food, fuel, and fertilizers) receiving approvals instead.
As such, several of the higher priced deals that had been concluded into Bangladesh over the past few months, are only now starting to deliver after delays on arrival, as the industry overall is starting to witness how increasingly difficult it might just be to obtain L/C approvals on upcoming deliveries. As such, it is highly recommended for Owners with any incoming vessels into Bangladesh, to either re-position their units towards competing markets (i.e., India at lower levels but a far more assured performance) or to ensure that a minimum of five days between arrival, tendering NOR, and payment release is provided by End Buyers to ensure they can open L/Cs, have funds arranged for, and then have their end of the transaction wrapped up in time for beaching. Meanwhile, Pakistan remains in a rut, invisible to the Ship Recycling Community, whilst Turkey continues to sail through week after week, with nearly the same result. These are certainly not the markets of old we are operating in any longer, and some more time & patience will be required moving forward, in delivering the larger LDT vessels. The end of the Holy month of Ramadan from next week should also bring some greater clarity and desire / demand to buy”, GMS concluded.
Source: Hellenic Shipping News
