The ship recycling market has once again heated up, with ship owners financially incentivized more than ever to sell their older tonnage. In its latest weekly report, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said that “Sub-continent markets continue to fire on during the summer / monsoon months, as firmer steel plate prices and an increasing lack of available tonnage has invariably pushed sub-continent offerings on to previously unthinkable levels. Not since the boom year of 2008 have we seen levels quite so high, and as the mythical USD 600/LDT draws ever closer, we will certainly see some fresh sales records being set from over the past decade. Notwithstanding, what comes up must eventually come down and many in the industry are now starting to fear that the markets may have peaked already and are now adjusting their levels in anticipation of some kind of an adjustment in the immediate future”.

According to GMS, “to see levels DOUBLE over the course of just the last year alone, is quite an impressive and unexpected feat. The supply of tonnage has been increasingly centered around offshore units and tankers of late viz. smaller bunkering tankers, MRs, Aframax tankers, and even FSUs, along with a variety of offshore vessels – including MOPUs and drill ships. Due to the ongoing global Covid-19 restrictions, the expected summer slowdown has yet to really occur and most yards across the sub-continent recycling markets remain open and ready to accept vessels, as opposed to the slowdowns experienced during the seasonal retreat of yard laborers back to their hometowns over the summer / monsoon months. Similarly, shipowners and shipbrokers continue to do business at these fantastic numbers whenever they can, especially as freight markets also remain strong across the dry bulk and container sectors. Finally, global vaccine rates need to pick up, in order to combat the concerning spread of the Delta variant of the virus as well. And it will certainly be interesting to see how countries like the U.K., Israel, and the U.S.A. fare, now that restrictions are easing as vaccine rates hit the magic number in excess of 70% for herd immunity to take hold”, GMS concluded.

In a separate note, shipbroker Clarkson Platou Hellas said that “the feel-good factor has not just been felt here in England after the football teams heroics, but also across the strong buying appetite being felt across the sub-continental markets. Despite many predicting a fall, this is yet to materialise and with the lack of workable tonnage looking set to continue until at least the end of the year, demand should remain strong resulting in continued aggressive rates. Surely, it is only a matter of time for the much anticipated USD 600 per ldt level to be reached for a conventional ship which would be a remarkable recovery from this time last year where the market was in a depressed state due to the Covid restrictions in place. The Pakistani recyclers are making a sterling effort to compete with their counterparts in Bangladesh, however, are still a little short in their indications, whereas the Indian recyclers are still unable to mount any competitive levels”, the shipbroker said.

Allied Shipbroking added that “the robust activity in the ship recycling market resumed this past week, despite that fact that we are within the monsoon period and the fact that the market has almost completely dried up of dry bulk and containership demo candidates. The uninspiring freight scene on the side of tankers and on in other secondary sectors, in combination with the record highs in offered scrap prices have maintain the interest in the ship recycling industry vivid. Enquiries have started once again to ramp up in Bangladesh, with local scrapyards offering very attractive scrap prices, while several slots are again available.

At the same time though the COVID-19 resurge has obliged the government to announce fresh lockdown measures, trimming appetite. Meanwhile, an improved picture is witnessed in India as of late, with interest for ship recycling having started to increase slowly but steadily. The domestic players are still behind competition on the pricing front, but interest from offshore and tanker owners seem to have revived. Finally, a strong market has been seen in Pakistan as well during the last few weeks, with Gadani scrapyards attracting owners due to robust fundamentals. Actual businesses may well have remained modest, but it is expected that more activity will be seen in the coming weeks”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide