Tonnage supply hinders further ship recycling

TThe apparent lack of more willing sellers has hampered any further growth in the ship recycling market over the past week. In its latest weekly report, shipbroker Clarkson Platou Hellas said: “Bangladesh recyclers continue to lead the market with this week seeing improved price levels for every tonnage available! While there is talk of several Chinese-owned units being launched, either potential or definite contenders, overall supply appears to have dwindled in recent weeks. We also have Ramadan just around the corner where activity is expected to slow as we approach April. Additionally, there remains a strong interest from Indian recyclers to re-purchase tonnage, however their price levels have now fallen by the wayside compared to Bangladesh and with few ‘HKC compliant’ tonnages for sale we see a calmer period for the Alang industry ahead . Once again, Pakistan is staying out of the picture for now as its banking restrictions are expected to remain in place and hamper the competitiveness of local recyclers. The lack of available tonnage on offer should improve mood and increase appetite, which at this point will only be positive from the Chattogram and Alang shores.”

Source: Clarkson Platou Hellas

In a separate note, shipbroker Allied added: “Bangladeshi crushers really proved to be the target of choice last week as prices continued to exceed what Indian crushers could offer and three ships were sold there for recycling. Buyers have found financing for ships as large as the Sunny Voyager at 22,159 LDT, and progress continues in meeting all IMF conditions, with the government planning adjustments to taxes and interest rates. In the meantime the most acute pressures have eased although it is not evident that this will result in higher purchase rates than we have seen in recent weeks due to the improved condition of the dry bulk market and continued high tanker revenues.

Source: Allies

Pakistani breakers remain out of the market as stability in the form of IMF support remains just out of reach. The latest hurdle is the IMF’s requirement that existing debt be restructured before funds are disbursed. With China appearing somewhat reluctant to renegotiate the $30 billion owed to it, there is no immediate end in sight to these current difficulties,” the shipbroker said.

Meanwhile GSM (www.gmsinc.net), the world’s top cash buyer of ships, said in its latest report that “the continued increase in recycling rates continues for another week, although a slight drop in supply combined with some volatility in sheet steel prices (particularly in India) appeared to have weighed on the markets in to put a little damper on the last few days. An improvement in container and bulk charter rates has reduced the influx of recycling candidates in recent weeks, and much of the strengthening local demand may not materialize for some time. Indeed there has been only a trickle of vessels for sale this past week and so few owners seem to have taken advantage of these higher rates, perhaps at the peak of the market. With supply dwindling and demand firming, prices therefore continue to impress, particularly in a Bangladesh market that has been essentially starved of tonnage for the past 6-8 months due to ongoing L/C issues.

Source: GMS

Alternative financing methods have been established (including L/Cs and private financing solutions) to secure a portion of recent tonnage for Chattogram buyers. However, the current preference of local recyclers (given the ongoing L/C restrictions) remains to purchase smaller LDT tonnages rather than the more expensive large LDT vessels which may not get L/C approval – that’s how bad it is the shortage of US dollars currently in the country. Talks on ongoing IMF loans continue in both Pakistan and Bangladesh and once this is complete we should see greater liquidity in L/Cs and the opportunity for all recyclers in these markets to have larger LDT vessels at firmer levels to secure. Finally, on the other end, Turkey remains healthy and stable with no reported changes in steel and still no reports of the mysterious negotiations that have reportedly taken place over the past few weeks,” GMS concluded. Source: Hellenic Shipping News Worldwide

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