Few sales have been completed in the ship recycling market this past week, despite the fact that there are more negotiations taking place. In its latest weekly report, shipbroker Allied Shipbroking said that “whilst there are certainly more units being talked around, actual concluded sales remain limited. Sentiment remains optimistic from both India and Bangladesh, the latter in particular, as their L/C issues ease further. Looking at the potential supply of tonnage, the container sector is certainly the area that we shall see more units (smaller feeder types mainly) arrive from, but the dry bulk market could also provide more units as the charter rates continue to slide with average bulker earnings dropping below the USD 7,000/day by mid-February, the lowest levels since Jun-20 following the weaker global economic conditions. These weaker conditions appear likely to remain in the short-term, however there is optimism that improvements are expected to materialise through to the remainder of 2023. There have been a couple of capesize bulk carriers reported sold this week, however there are reports that these units may continue to trade for the short term. On the wet side, the lack of available tanker units coming into the recycling industry looks set to continue with a historically small orderbook and a range of supportive demand drivers”.
In a separate note, shipbroker Allied Shipbroking added that “a good week for ship recycling which saw another LNG carrier heading for demolition, just weeks after the sale of the “Seapeak Arctic”. Reportedly fetching almost US$ 22m in a sale to cash buyers, the “Adriatic Energy” achieved a price of around US$ 680/LDT almost US$ 40/LDT higher than that of the “Seapeak Arctic” – its larger size and lack of HKC green recycling conditions likely the reason for this. Without HKC conditions attached, the target destination could be the beaches of Bangladesh given the higher prices offered. Indian breakers could soon compete a little better if reductions in import duties are passed on to sellers. Assuming a nominal US$ 570/LDT rate from Indian breakers and that the entire saving is passed on, the increase in price would amount to roughly US$ 15/LDT. While narrowing the c. US$ 20/LDT gap, it still leaves Indian breakers behind what breakers in Bangladesh are offering. Much needed good news came from Turkey, with three vessels sold, including the modestly sized 11,488 LDT “Pride of Burgundy”, making way for P&O’s new vessel “Pioneer”. All were European controlled, highlighting the trend for such vessels to head to Turkey for recycling”.
Meanwhile, GMS (www.gmsinc.net), the world’s leading cash buyer of ships added that “a strong showing from nearly all of the major recycling markets over the last few weeks has left a far rosier picture (especially in India, Bangladesh, and even Turkey) and has encouraged a few more Sellers to market their vessels for sale for recycling. Indeed, several sales market (and reportedly even private units) have also been concluded for the week, including another large LDT LNG (rich in non-ferrous) and another Capesize Bulker. However, it has been a good week for dry charter rates (Capes in particular) with some healthy gains posted to alleviate some of the doom and gloom witnessed over the last few weeks. Recycling markets can therefore rest easy that the hitherto expected deluge of tonnage is unlikely to materialize any time soon.
Overaged containers and dry bulk units are still the most likely to head for recycling, amidst a healthy outlook in the tanker / wet sector at last, but the recent bullishness displayed in freight sectors has overall put a bit of a dampener on the expected output of supply. On the local markets front, India has done away with the GST tax on the import of ships for recycling, in order to improve margins for End Buyers by about 2.5% and this has already started to reflect in the local markets that are showing greater positivity this week. Bangladesh has been the main proponent of the surging markets for the week, with prices pushing on and sentiments soaring as demand has built up after a fairly inactive 6 – 8 months. This is in contrast to a glum Pakistani market, where L/C approvals are struggling even more than Bangladesh, whereas the Bangladeshi market is starting to ease up somewhat on L/Cs for select Buyers with private banking means for financing on fresh vessels. At the far end, the Turkish market spent a week of inactivity, with steady plate prices (import and local), strong offerings, and still no confirmation on local fixtures”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide