Demolition Market Comes Back to “Life”, Albeit in “Slow Motion”

Comments Off on Demolition Market Comes Back to “Life”, Albeit in “Slow Motion”

Demolition Market Comes Back to “Life”, Albeit in “Slow Motion” | Hellenic Shipping News Worldwide

in Hellenic Shipping News 24/10/2019

Ships’ recycling activity has been the negative “star” of today’s shipping market, with tonnage sold for scrap failing to reach Southeast Asias’ shores. As a result, concerns are bound to be raised on the future balance of supply-demand in the maritime segment. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with what has been one of the quietest years on record to date, we finally saw a trickle of tonnage filter into the market this week which has started to resemble a functioning market once again. There have even been a small flutter of sales with one large LDT dry unit (see below) in particular catching Owners’ eyes and it remains to be seen whether this is another ‘false dawn’ or that we start to see more units entering the market place over the final couple of months of the year. As we approach the Diwali celebrations towards the end of this month, some buyers may, per the seasonal norm at this time of year, start searching eagerly for fresh tonnage where a ‘pick up’ in price levels usually occur”.

“But buyers may need to be more aggressive than ever in order to lock in tonnage with freight markets still performing strongly, swaying Owners attentions away from the recycling destinations. Whether the latest increase in price levels has an effect on Owners decisions remains to be seen! The problem we do face is that there still seems to be only one dominant market at present, Bangladesh, which leads the way for pricing and demand. Pakistan continues to be a ‘non-existent’ recycling destination, for almost 18 months, and India looks set to continue to concentrate on specialist units rather than being aggressive on large LDT market tonnage”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate note, GMS, the world’s leading cash buyer added that “following a brief few weeks of positivity, subcontinent markets are once again embarking on a dispiriting downwards descent, with End Buyers withdrawing their offers amidst declining levels from India, Bangladesh and Pakistan. There appears to be little stability to cling on to, with Local Recyclers nervous about further declines ahead and prevaricating over an imminent influx of tonnage through the last quarter of 2019 / first quarter of 2020 (that is just over the horizon). Notwithstanding, present-day reality is that there are very few vessels being currently proposed for demolition, with all charter markets (particularly, larger LDT tankers) that are currently flying. Moreover, scrap pricing almost seems to be in a complete contradiction to the trading markets, with worrying fundamentals underpinning an overall larger malaise at play in the subcontinent markets (and Turkey, to a good extent). Currencies, especially in both India and Pakistan, have taken a battering over the course of the year (especially the Indian Rupee, which has depreciated by almost 2% over the past couple of months alone), whilst local steel plate prices have declined alarmingly in all locations over the summer / monsoon months, by about USD 75/LDT. On the one hand, during the peak of the market earlier this year, industry players were frequently witnessing trades into the mid (and higher) USD 400s/LDT; on the other hand, we have (of late) seen several fixtures (admittedly on poorer units) in the low USD 300s/LDT. As such, given the overall performance of the industry, a healthy majority of End Buyers in the subcontinent markets are simply choosing to not offer at all – struggling either with their banking limits, or fearful about the lack of stability that is continually festering in the various subcontinent recycling markets”, GMS concluded.


Nikos Roussanoglou, Hellenic Shipping News Worldwide

Comments are closed.