Ship Recycling Industry Should Restart in the Next Few Days

Ship Recycling Industry Should Restart in the Next Few Days

in Dry Bulk Market, Hellenic Shipping News 27/05/2020

A ray of light could be emanating from the Southeast Asian peninsula over the past week, despite the recent extension of lockdown measures. In its latest weekly report, shipbroker Clarkson Platou Hellas noted that “the week has once again ended with lockdown extensions announced across the Indian Sub-continent, with Bangladesh announcing further measures until the 30th of May, India until 31st May and Pakistan until 2nd June. Despite this, we are starting to see an easing of restrictions locally for the Ship Recycling industry, where a few vessels have now been beached during the lockdown in both India and Bangladesh”.

According to the shipbroker, “it is important to stress however that they had Indian crew onboard enabling them to be easily repatriated home overland, which is why vessels with foreign crew onboard are still encountering difficulties due to international flights remaining closed from this part of the world. It does however feel like there is an improvement in market sentiment – we do seem to see more enquiry from Cash Buyers, but we will have to wait and see if this fully materializes to the waterfront, as the respective Governments will mostly likely continue their full lockdown restrictions until after the Eid holidays. Thereafter, and in traditional fashion, we have seasonally witnessed the market rebound post Eid holidays and the pre-monsoon months, before the rains incapacitate the functioning of the recycling yards, however with this year being rather extraordinary, we will wait and see how the markets react after the festivities if indeed, these three sub-continental countries relax their lockdown fully. Moving to Turkey, whilst the lockdown continues to hamper activities with only those vessels under tow being allowed to enter the recycling yards, it is interesting to report that we are seeing price levels locally starting to creep back up after an initial fall due to the Covid-19 pandemic. It is reported that domestic steel prices have improved aiding renewed appetite from the recycling yards. Although as a previously raised concern, the capacity for EU flagged/owned tonnage in Turkey is starting to fill up rapidly with two out of the four yards that are EU approved stating they are basically full until the end of the year. Despite much talk from certain authorities stating there is sufficient capacity for EU flagged vessels, this is quite apparent that some misinformation is being provided to certain sources – it is leaving Owners trading in EU waters or under EU flag with very little options indeed should they need to recycle their units. This is set to be an area to keep a close eye on in the coming months ahead as the economic impact from this Covid19 outbreak starts to be felt more severely and put Owners under more financial pressure”, Clarkson Platou Hellas concluded.

Meanwhile, in a separate note this week, GMS, the world’s leading cash buyer noted that “despite imminent talks of markets reopening soon, prices have displayed a generally negative spiral in the subcontinent markets this week, with end Buyers lowballing on any available units, including those vessels that are currently stuck at anchorages of the various recycling destinations and thus playing into the Recycler’s hands. Yet, as the week ended, there was still no official news on the markets reopening in any location, with only those vessels with domestic crews onboard being allowed to beach or those exceptional cases where special permissions were granted by the relevant authorities. In Bangladesh, several vessels that have been waiting for nearly two months and one in India, are now considered to be in a distressed situation (due to the amount of waiting time) and have finally been granted special beaching approvals after appeals to the embassies of the relevant crew members and exceptional permissions from the customs / shipping authorities. Draft SOPs have been issued for review to permit the beaching of vessels with foreign crew on board and it is hoped that these may come into force once officially signed off / ratified within the next week or so”, GMS concldued.

Nikos Roussanoglou, Hellenic Shipping News Worldwide