Ship Demolition Prices Offered at Attractive Levels


Ship demolition prices offered at attractive levels, as buyers try to lure more ship owners in

Prices for ships headed for demolition in the broader Southeast Asia region have kept their firming up for yet another week.  This could prove a positive trend for the future tonnage supply.


GMS Report

In its latest weekly report, the world’s leading buyer of these types of assets, GMS, noted that “during a week in which over $20/LDT was shaved off Indian steel plate prices, some of the jittered sentiment returned to cash buyer offerings as levels on available units started to be scaled back or even being withdrawn altogether.  This (unsurprisingly) did not cease the number of candidates currently flooding the market, particularly from the beleaguered container sector.  However, it was immediately noticeable that subsequent deals were starting to be done at numbers lower than those from previous weeks”.

The scenario in Asian countries – Pakistan, Bangladesh, China, and India

The GMS report said that “on the market front, despite the sale of one high-priced capesize bulker last week, Bangladesh remained a virtual non-event for yet another week whilst Pakistan began to creep up on the back of the rampant demand from the Indian market with some interesting demand / offers during the week.  It has already become a frenzied fourth quarter of sales and activity so far and the upcoming Diwali holidays will certainly give Indian buyers a deserved break from the action (following Eid and Ramadan holidays in Pakistan / Bangladesh and the October holidays in China, which are already affording competing markets, substantial breaks from the action).  Demand remains ripe in almost all locations. Yet, there is an emerging and noticeable gap of about USD 10 – USD 15/LDT between prices being offered from all sub-continent markets (previously only USD 5/LDT apart).  Despite the substantial falls in Indian steel prices, the market is expected to rebound next week on the back of which, local sentiments remain strong.  Therefore, this may likely be a momentary blip in an otherwise extremely volatile time for an overall bullish sector”.

In India, GMS noted that volatility reigns.  “following the last couple of weeks with over 10 container sales – mostly into the Indian market – a far more muted week ensued with only a few market sales to speak of.  The Thai owned chip carrier NPS ORANA (9,094 LDT) managed to fetch an extremely high USD 299/LT LDT to one bullish buyer basis a full sub-continent range delivery option – the likely destination being India due to size and a low Bangladeshi market at present.  The German container BONNY (12,612 LDT) fetched a firm USD 306/LT LDT basis ‘as is’ Hong Kong delivery with only 200 Tons of bunkers ROB upon delivery.  This compares to similar sales on container units basis ‘as is’ deliveries at Hong Kong and Shanghai from several weeks ago at USD 315/LDT – illustrating the recent market softening.  The alarming news in India concerned the slide in local steel plate prices of about Rs. 1,500 (about USD 22/LDT) during the course of the week, as each day bought fresh lows and curtailed end-buyer bullishness on the buying front.

Notwithstanding, sentiments remain strong overall and the market is expected to bounce back next week as these latest moves have become rather typical of the extreme fluctuations seen in the Indian market of late.  The Indian Rupee continues to trade at a steady level in the mid Rs. 66s against the U.S. Dollar, in the one sector that has remained relatively stable”, GMS concluded.

Allied Shipbroking report

Meanwhile, in a separate note, Allied Shipbroking said that “with the inflow of demo candidates still holding below the average noted in the year so far and with local steel plate prices in the Indian Sub-Continent still showing strength, it has allowed prices to remain perched firm at their new highs and buying appetite to show little sign of being satisfied just yet.  There is still a considerable amount of fear amongst some buyers that things are unstable and could easily turn sour any moment, though with prices having managed to hold their ground for a third week, it looks as though there are enough speculators around to keep offering at the going price levels.

With uncertainty still rife, it is still higher quality tonnage with higher steel content that achieve the most favorable price levels.  There is still however a sense that if we start to see another steep flow of demo candidates towards the final months of the year, a possibility which is quite likely given the new regulations that are being pushed on current tonnage, prices will be put under considerable pressure and could show a fast paced drop closer to the levels seen in early summer”.

Shipbroker Intermodal

Finally, shipbroker Intermodal said in its latest report that “there was a sense that the demolition market was running out of steam last week as skepticism started clouding Indian subcontinent business, with breakers in the region feeling that there was little argument for the levels prices have reached recently.  The sharp drop scrap steel prices noted specifically in India during the past days has been the main source of this momentum pull back in the region, while the paradox here is that this drop has affected much more sentiment in Bangladesh and Pakistan and much less Indian sentiment.  Indeed, a look at recent activity, reveals that the Indian market was the only one who was unscathed by this drop, with appetite among local breakers remaining very firm.  Indian breakers have for yet another week nearly monopolized any action that took place and they did so by still offering in excess of $300/ldt, a level that only cash buyers in

Pakistan appear willing to flirt with but apparently not with the same frequency their Indian counterparts have been doing.  Whether this strong Indian momentum will resume in the next days is not easy to tell, as the upcoming Diwali holidays could slow down action but could also cause a pre-holidays rush buying.  Average prices this week for wet tonnage were at around 195-305 $/ldt and dry units received about 185-300 $/ldt”, Intermodal concluded.

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Source: Sea Job Hunt