As we enter the final part of 2018, a resurgence in demolition activity, which has retreated over the course of the summer months, would be very welcome, in order to further alleviate overtonnage issues in various parts of the shipping market, most notably the tanker segment. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “last week, as anticipated, remained largely quiet as those recycling destinations celebrating their Eid holidays took time away from the confusing markets to concentrate on the festive occasion with their families. To try and obtain any resemblance of an indication or firm offer proved almost impossible but surprisingly, despite the quiet mood, several sales have been reported. Prior to this holiday period, Bangladesh and Pakistan had shown some positive sentiment and therefore it is hoped that this week will bring some further renewed optimism to the market and maybe see some increased rates. As we move out of this seasonal holiday period, it can be expected that activity and inquiry will increase and hopefully local fundamentals in regards to the domestic steel markets, currency rates etc. will also improve to aide a recovery in the market conditions enabling a busy and constructive run towards the end of the year”.
In a separate report, Allied Shipbroking also added that “limited activity was seen in the ship recycling market these past two weeks in the key sectors, as the summer lull, continued monsoon weather and political turmoil continued to disrupt market appetite. Only 3 vessels were reported scrapped in the dry bulk sector, with the only notable activity being the recycle of the 1995 built M/V “Winning Brother”. In the tanker sector, 3 vessels were scrapped, with the 20 years old Aframax “Bahamas Spirit” being the most notable. The rest of the activity noted during this time frame was shared amongst other secondary sectors. However, activity is expected to rebound in the final quarter of the year, boosting prices as well. Meanwhile, sentiment has been increased in Bangladeshi and Indian market, with prices being slightly increased and rumors for new deals spread around. On the contrary, positive news in Pakistan about the resume of cutting of tankers has not yet materialized in the market. Finally, the Turkish market is still affected by the local currency collapse, while China is still essentially out of competition due to the regulatory restrictions there”.
Meanwhile, a more optimistic GMS, the world’s leading cash buyer of ships said that “signs of life finally started to emerge from the subcontinent markets this week as prices in both Bangladesh and India showed marked improvements and cutting permissions on a multitude of tankers beached in Pakistan are finally set to be issued this coming week. Indeed, local steel plate prices in India have bounced back nearly USD 30/LDT over the last 10 days, making up for some of the dramatic declines (to the tune of about USD 50/LDT) witnessed over July and early August. Bangladesh too seems to have regained some of its appetite following an incredibly sluggish summer / monsoon period as many of the VLCCs and large LDT tankers delivered during the first half of the year have been / are in the process of being absorbed, with the likelihood that a growing appetite to acquire fresh tonnage could emerge post-Eid holidays. Activity in Pakistan, Bangladesh, and Turkey has been muted during the week long Eid holiday period.
However, given that fundamentals are starting to turn positive in the subcontinent markets and demand too has improved (on the back of a lackluster supply of vessels over the past few months), it is expected to be a busier and more bullish final quarter of the year – as has traditionally been the case. Gadani buyers are also starting to wake up to the stark reality that their well below market offerings are leading them nowhere. However, following re-inspections of several tankers about a week ago and the strong likelihood of cutting permissions forthcoming, the near future could see Gadani Recyclers firming their levels once tonnage starts to be absorbed. Finally, both China and Turkey remain suspended with almost no possibility for the only open Chinese yard to conclude tonnage. Turkey may stand an opportunity in the weeks ahead, however until present day levels sink in to become the accepted reality for those looking to sell their vessels into Turkey, this market is destined to remain on the sidelines”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
