By Samson Echenim
This year won’t go down in the record books when it comes to ship recycling, despite the fact that, according to some market delegates, it should. In its latest weekly report, shipbroker Clarkson Platou Hellas said “it has been an unusual week where there appears to be no real function in the market with sentiment from the actual recyclers appearing to be wavering.”
Reports suggest that the recyclers are reluctant to offer any significant rate and seemingly, a standoff has emerged between the recyclers and the cash buyers who hold tonnage in hand. Perhaps, this current position is down to both sides having different views on where the market lies and the direction is heading, creating a rather disjointed market. Unlike the usual pattern of the supply and demand scenario normally associated with the recycling industry, the breakers today seem to be happy to wait for rates to fall to their own indications despite a clear lack of tonnage being made available.
“One of the realities of the current environment is that the breakers must take into consideration we have now entered the annual global summer holiday period and we can expect the lack of available candidates to continue and for this current lull to remain in place for the next month or two. With the aggressive monsoon season however hampering the lives of all concerned in India and Bangladesh, no price increase is expected to be seen for the foreseeable future”, said the shipbroker.
In a separate note, Intermodal said that “the demolition market has seen some unexpected activity taking place in the past days with a number of containers units making their way into the Indian subcontinent region, while despite the recent admittedly impressive improvement in the dry bulk freight market it seems that owners of vintage tonnage of above 20 years of age are still happy to sell their vessels at current levels. We don’t expect to see this level of activity during the following weeks, as the summer season peak together with the ongoing monsoon season are both expected to keep things slow, while in terms of prices we are most probably going to see discounted levels offered across the board. Average prices in the different markets this week for tankers ranged between $270-420/ldt and those for dry bulk units between $260-410/ldt”.
Meanwhile, GMS, the world’s leading cash buyer added that “markets remain stuck in the quagmire this week, with local steel plate prices declining across all subcontinent markets and by about USD 35/LDT in India over the course of a few weeks, Bangladesh is still reeling from the 10% VAT that was imposed in their recently announced annual budget, the Pakistani market has remained quiet as domestic fundamentals remain under pressure and lastly Turkey seems entombed by its fundamentals as the Lira weakens once again.
The monsoon season has traditionally been a quieter period in the subcontinent markets, with most of the SNP activity, beachings and recycling operations taking place in the first five to six months of the year before the constant rains slow all yard activity to a virtual standstill and laborers return to their home towns. Yards in Chattogram remain stuffed with tonnage and local aggression to acquire fresh units may not return until the fourth quarter of the year commences once previously delivered units are co