The ship recycling market has experienced slow activity as the Diwali festivities took over. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “this week, the recycling market remained fairly inactive as the Diwali festivities were in full swing. There does however seem to be some spring in sentiment from the recycling yards following the continued shortage of supply of tonnage which is resulting in improved indications. The Indian recyclers continue to lead the way in pricing, but it will be interesting to see how the domestic steel markets open on Monday ‘post-Diwali’ and how the sentiment of the Buyers is reflected from then onwards. Activity from the Bangladeshi and Pakistani markets remain limited as the ongoing issues opening Letters of Credit is still unresolved and these financial difficulties look set to continue into the New Year”, the shipbroker said.
In a separate note, Allied said that “the recycling market continued on a slightly quieter pace, in part as a consequence of Diwali celebrations. One sizeable sale emerged, in the form of the ‘SAMC Eddie’ of 24,181 LDT, with delivery in January. Considering how close the $505/LDT is to the current market, this suggests some confidence in prices over the coming two months, particularly in light of the ‘as is’ nature of the sale. This might not be a bad assessment, given that there have been some beneficial scrap and steel price movements across the Indian Sub-continent, with breakers in India poised to benefit from positive movements in global steel markets, even if domestic price changes have not all been in their favour.
In Bangladesh and Pakistan, LC problems continue to hamstring buyers, but on 15th November IMF staff and the Pakistani authorities reached an agreement which will provide Pakistan with access to around $700m if approved by the IMF’s executive board. Hopefully this will ease the opening of LCs for buyers, though offers will need to catch up with their competitors before this translates into vessel arriving at yards in Gadani”.
Meanwhile, in its latest weekly report, GMS, the world’s leading cash buyer of ships, said that as Diwali holiday celebrations concluded earlier in the week, Alang Recyclers seems to slowly be filtering back to work amidst declining plates prices, sentiments, and local offerings that remain stagnant. Unfortunately, this remains the ongoing dilemma across much of the Indian sub-continent ship recycling markets, especially as steel plate prices are yet to gain ground to the extent many in the industry had been hoping for thus far, whilst currencies simultaneously continue to cause ongoing worries for respective domestic markets.
On the flip side, Turkey continues to record minor improvements in steel fundamentals and vessel prices, all while another slow week of sales activity permeates across all of the major ship recycling markets this week, with limited offerings on tonnage or even any market / private deals being reportedly concluded this week, which is subsequently pushing present day sales candidates further down the conclusion timeline, as key players in the industry continue to expect a decent / firmer end to the year and especially early 2024. Meanwhile, Bulk Carriers and Containers continue to surprisingly trade at a fraction above their current Opex levels, even if recycling prices are at historically (and relatively) firmer levels today. This may perhaps be that these present-day slim earnings on vessel trades are likely not as (financially) troublesome to vessel who Owners who may have had quite the success and finances accumulated across the various sectors during the Covid-19 Pandemic. Additionally, owing to the severe lack in the availability of U.S. Dollar reserves in the affected ship-recycling destinations and government mandates introduced to restrict the allocation of dwindling foreign currency reserves on essential items only, which has resulted in domestic banks becoming increasingly unwilling to sanction fresh L/Cs on recycling vessels in Pakistan and Bangladesh. As such, troubling times continue to persist across nearly all of the major ship-recycling locations as Recyclers continue to bid on tonnage, all with the ongoing anticipation of a firmer start to 2024 – particularly if international steel prices are anything to go by!”, GMS concluded.
Source: Hellenic Shipping News
