Capesizes still headed for scrap despite market rebound
In what could only be described as a more than a positive omen for the future prospects of the dry bulk market, dry bulk carriers and more notably Capesizes are still being sold to scrap yards, even if the number of vessels offered has declined over the past few weeks. According to the world’s leading cash buyer, GMS, a total of 13 Capes have been sold for scrap so far in 2017, as buyers are willing to pay more money, thus making it an easier decision for some ship owners, in the midst of a rebounding dry bulk market.
In its latest weekly report, GMS noted that “the heat that has been emanating from the recycling markets in recent weeks showed few signs of abating this week, with several increasingly impressive sales being concluded to cash buyers who are turning over-bullish in their offerings. Another capesize bulker was committed this week (taking the total number sold so far this year to 13) whilst several container sales also took place at some top numbers. Just how much longer this heat will sustain itself, is a point of concern to all cash buyers (who are concluding units at numbers that are turning crazier by the week) as well as end buyers, given that the monsoon season is on the horizon, supply has been fairly consistent and local steel plate prices (and currencies to an extent) remain volatile as ever.
For the time being, all markets can bask in this renewed optimism and any resistance to these levels can be banished, as most end buyers dip back in to acquire tonnage, despite lingering concerns about aggressive pricing”, said GMS. It added that demand and capacity remain healthy across all locations. As such, it would not be surprising to see a sustained optimism in the buying for the remainder of the month, before monsoon considerations start to become concerns for subsequent deliveries.
In a separate note this week, shipbroker Clarkson Platou Hellas said that “the strength being noted lately in steel prices across all locations have played a crucial role in keeping the ship recycling market fairly buoyant. Prices have managed to hold their relatively high position, for now, being driven by a further appetite that’s emerging from the Indian Sub-Continent and in particular, from India whose, ship breakers have resurfaced in the market with a willingness to compete hard on the few demo candidates that are in circulation. The positive sentiment from the side of breakers has played its role, however, the market has received considerable support for these prevailing prices by the fact that the number of vessels being offered has been considerably fewer than what we were seeing in past years during the same time period.
There has been a considerable amount of containerships being sold, however, will other segments have been seeing limited activity up to now and with some segments such as dry bulkers seeing a considerable recovery in rates, the number of vessels offered to scrappers has declined as a consequence”, said the shipbroker.
Meanwhile, touching on a similar subject, on the occasion of a shipbreaking industry conference held in Singapore, Clarkson Platou Hellas said that “it remains evident that the recycling community in the Indian Sub-Continent continues to upgrade their yards including Bangladesh and Pakistan. However one thing that has never changed is the attitude of the NGO Shipbreaking Platform who still, do not acknowledge the incredible improvements made in the Indian yards because of their “no beaching” mentality and thus will still not pass any positive judgements or acceptances to the local recyclers who continue to use their own funding to upgrade their standards. It was interesting to witness a presentation by the PHP yard in Bangladesh showing an incredible improvement to their yard and the enormous cost to them, but the unfortunate scenario at this time is the current lack of facilities in the country to dispose of the hazardous materials. However with the attendance at its highest this year since the conference was established, it clearly shows how all the recyclers in all three areas of India, Bangladesh, and Pakistan value their industry and how improvements to their yards will continue with proposals of floating barges and jetty’s possibly being built to avoid any materials in contact with the water. It was also very encouraging to see so many of the young recyclers attending who certainly have the ethos of providing environmentally friendly Recycling and positive health and safety issues to their labourers.
Sadly the NGO and other environmental organisations are still unwilling to accept these positive changes towards the industry. Concerning the market, this annual get-together seems to bring a change of attitude from the Cash Buyers. On the back of interesting improvements from China where we are now talking closer to the USD 300/ltd level (not achieved yet), some cash buyers seem to have a spring in their step with many predicting over dinner and drinks that the market is on the up. Evidencing this are the sales reported this week showing improved rates and the forecast is that rates will carry on improving for the time being whilst some of the cash buyers try to dictate the market with possible over eager speculation. The question as always is, are the actual recyclers themselves supporting the improvements being seen. With the steel markets increasing globally, the speculation being seen could be rewarded”, the shipbroker concluded.
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Source: GMS
