Positive Momentum in the Shipbreaking Industry Ahead of Regional Holidays

Positive Momentum in the Shipbreaking Industry Ahead of Regional Holidays

in Hellenic Shipping News 15/11/2023

The shipbreaking industry was a rather positive one over this past week, amid the Bahri week in Dubai and the forthcoming Diwali holidays during the next seven days. In its latest weekly report, shipbroker Clarkson Platou Hellas commented that the past week was a rather good one for shipbreaking.

Source: Clarkson Platou Hellas

“What we can say is that whilst the domestic markets in all three Indian sub-Continent regions have seen some stability return, we certainly have not seen the usual ‘pre-Diwali’ boost in prices from India. There are reports of a few more ships trickling into the marketplace, however the majority are being withdrawn or temporising when Owners see that the price levels are not reaching their expectations. We understand that clients of MSC continue to drip feed some of their aging container units into India with every vessel giving prompt delivery, but generally the lack of tonnage continues. Overall, a quiet period has descended upon the market, which is expected to carry on during next week’s Diwali festivities”, Clarkson Platou Hellas concluded.

In a separate note, Allied Shipbroking added that it was “a strong week for Indian breakers as five vessels are committed for recycling, totaling over 40,000 LDT, just ahead of the start of Diwali celebrations on 12th November. The $535/Ldt for the ‘Catherine Bright’ appears to be above the market rate and could be a consequence of end buyers competing to secure tonnage ahead of next week, although there could be other reasons for this price. Across the Indian Sub-continent, imported steel prices rose and we might see this translate into higher offers from yards, though LC would remain an obstacle to purchases in Bangladesh and Pakistan. Only one container sale was reported over the past week, although the dramatic declines in Q3 earnings reported by the major liners, and their pessimistic accompanying statements, should help deliver a steady stream of vessels to breakers, particularly if the market weakness persists throughout the year as many anticipate. With tanker and, to a lesser degree, bulker earnings healthy, these sectors aren’t supporting high scrapping rates at the moment”.

Source: Allied

Meanwhile, GMS, the world’s leading cash buyer of ships said that “markets remain precariously poised as Diwali holidays are finally upon the sub-continent markets and the industry heads into the final months of the 2023. Although several sales have reportedly registered into India at some impressive levels, sentiments and pricing here remains muted overall. On the Eastern end and in the lead up to the Bangladeshi elections due in mid-January 2024 – disruptions, protests, and even strikes have embattled the country and as such, it is expected to become even more challenging to get L/Cs open & deliveries completed into Chattogram, especially as the ongoing unrest persists.

Source: GMS

Meanwhile, after another period on the sidelines, Pakistan is starting to see some buying interest reemerge, as the currency continues to depreciate once again; in that, as vessels get increasingly expensive, local steel plate prices would eventually have to firm in order to keep local business viable, and this is perhaps lending Local Recyclers some forward-thinking encouragement on potentially selling their product at workable levels in the near future / 2024. Lastly, the Turkish market reports even more improvements as both local and import steel prices registered improvements this week, with even price indications seeming to firm about by about USD 10/MT. Overall, with global steel prices now gaining some decent ground over the preceding weeks (including Turkey and notably even in China this week), there is the lingering hope that these improvements could filter through to the other recycling markets in the weeks ahead, especially upon the conclusion of Diwali holidays. And amidst the shaky hopes that markets do indeed rise to higher levels, there certainly were a handful of Cash Buyers who continue to be gambling on vessels with a forward delivery, all while prompt vessels are facing comparative discounts to those with a longer / forward laycan. Finally, in terms of supply – vintage Containers and Dry Bulk vessels continue to dominate the recycling lanes, but are still missing the volumes that many had expected, especially as charter rates and secondhand values are yet to sink and compel Ship Owner’s to recycle their units”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide