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Ship Recycling Market in Limbo

Ship Recycling Market

NGO Shipbreaking

The ship demolition market is plagued by a high level of uncertainty leaving the market analysts in limbo when it comes to discerning which direction the market will take. 

Despite the lack of tonnage, reports suggest that there is a general apathy from the actual ship recyclers making it very hard to judge market sentiment, Clarksons Plateau said in its latest shipbroking report.

“Asking cash buyers for an indicative price in today’s market for a particular vessel is intriguing at this time. Without any real transparency and confidence, the price differential between varied cash buyers could be a USD 20/ldt gap. Thus, only when several sales are reported do we ascertain the true value of a unit and market sentiment,” Clarksons added.

“We certainly had expected to see more supply than is currently being witnessed, however with the dry freight rates now seeing a negative change, a shift of owners mentality towards the recycling market may be seen.”

The shipbroker reported that last week the 1986-built bulk carrier Gulmar of 27,652 dwt was sold to a shipbreaking yard in Pakistan for USD 390 per LDT.

Based on Intermodal’s data, three tankers and two bulkers were sold for demolition last week. Aside from Gulmar, the 1979-built Mikhail Kutuzov featuring 23, 169 dwt was also sold for scrap in Bangladesh fetching a price of USD 373 per LTD.

The three tankers include 2000-built 109,354 dwt Pacific Cape, 1983-built Russian-flagged Kola Bay floating storage and production unit and small tanker Razna built in 1984.

Average prices this week for tankers were at around USD 240-410/ldt and dry bulk units received about USD 230- 390/ldt.

According to Intermodal, despite some stability in prices on the Indian subcontinent, the Chinese market still constitutes the only negative exception across the board, with the gap between the two regions widening further last week.

“The fact that the fall in Chinese scrap steel prices has so far failed to plague demo prices elsewhere is certainly a positive development, although as we have stressed before this is certainly creating insecurity in the market that has been trying to find a stable footing since the end of the summer season,” the shipbroker said.

At the same time, a new fire onboard the ex-Federal I in Pakistan “has significantly lowered expectations that the existing ban for tankers in the country could be lifted before the end of the year and has in result taken significant pressure off cash buyers in both Pakistan and Bangladesh who have been witnessing a very strong momentum in the tonnage hungry Pakistan,” Intermodal added.

The Original Posted by World Maritime News Staff

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