- Demolition activity has failed to maintain the gains, which came as a result of higher pricing enticing ship owners to allocate more tonnage for scrap.
- The improvement in offered price levels has helped mount interest in the ship recycling market, with a considerable number of units being sent for scrap as of late.
- The end of the summer break has helped activity ramp up as well, with further interest being expected during the last quarter.
- After some mammoth gains over the previous weeks, a touch more caution has started to enter the markets this week, particularly from both India and Pakistan.
- Bangladesh, on the other hand, appears to be gearing up for a fourth-quarter resurgence.
Demolition activity has failed to maintain the gains of the past couple of weeks, which came as a result of higher pricing, reports Hellenic Shipping News.
Volatile shipping market
In its latest weekly report, shipbroker Clarkson Platou Hellas said that “it has been a week emphasizing how this market is ever changing and volatile, ensuring it always difficult to know a vessels true market value. This has come about following a change in sentiment this week with some conservatism on rates coming into force again.”
It has been reported that the domestic steel markets are quivering at the prices being seen in the international market and fears remaining in the Subcontinent regions, particularly
- India, regarding the continuing rise of COVID-19 cases and the handling of the virus and importantly, how they intend to deal with the upcoming Winter.
- Some hesitancy has also encroached Bangladesh where local recyclers remain cautious at present which is mainly attributed to the large Cape and VLOC’s acquired earlier in the year and yards still digesting this large LDT tonnage.
- Pakistan still remains the most eager destination for vessels, and the strongest in terms of price levels, of all three Sub-Continent markets.
Artificial market with bulker sales
According to the shipbroker, “we would stress also that the large Bulk carrier sales that were reported in some media outlets and market reports last week seemed to have excited many without knowing the context of the deals concluded and creating an artificial market.”
With the two reported capesize units sold, there is an option to trade these units further which it is understood the Buyers will be take up and fix them both on charter due to the firming freight markets.
This also goes for the Panamax concluded in the sale which ties in with the two Cape bulk carriers as a package and thus not a market related price and just one to watch until she inevitably arrives at a recycling destination.
“With little supply of vessels on the horizon however, prices have a chance of recovering from the slight decline seen this week and hovering around the mid USD 300’s as many Cash Buyers have very little in hand and this is contributing to their frustration which could inevitably lead to some panic buying from some,” Clarkson Platou Hellas concluded.
In a separate note, Allied Shipbroking added that “the improvement in offered price levels has helped mount interest in the ship recycling market, with a considerable number of units being sent for scrap as of late. The end of the summer break has helped activity ramp up as well, with further interest being expected during the last quarter.”
- From the increased activity, major demolition players, such as Bangladesh, have benefited.
- The much-improved local steel plate prices have helped local players regain some of the spotlight, with activity though being still at moderate levels for now.
- It is expected, that this trend should start to change over the following weeks, as a result of the enhanced fundamentals.
- In India, a slight decrease was noted this past week in offered prices, with uncertainty playing a key role here.
- The persisting high number of new COVID19 cases and the fear of a second lockdown transpiring, have helped trim ship breakers’ appetite.
- Finally, Pakistan still holds top position for now in terms of offered price level, with most of the vintage units of late being snapped up by Pakistani breakers.
- However, we have started to see increased competition mount, something that could help pull price levels even higher in the near term.
Drop in prices
Meanwhile, GMS, the world’s leading cash buyer said this week that “after some mammoth gains over the previous weeks, a touch more caution has started to enter the markets this week, particularly from both India and Pakistan. Bangladesh, on the other hand, appears to be gearing up for a fourth-quarter resurgence, with some greater enquiries emerging and a couple of big offers reportedly coming forth on vessels currently in Cash Buyer hands.”
Of course, the chief concern remains the unrelenting spread of Coronavirus and India has once again broken daily records, registering almost 80,000 cases in a single day, as the country faces an increasingly worrying public health crisis.
Yet, there remains a growing number of Ship Owners who are keen to cash in at these vastly improved rates and with August summer holiday season coming to an end soon, we can only expect the supply of tonnage to increase, as we approach the final quarter of 2020.
Prices had been dropping to the mid USD 200s/LDT before some sort of form started to return to the markets and ever since, numbers have risen steadily and sharply to claw back around USD 100/LDT of the losses, in a matter of several weeks.
“Much of the demand has already been quelled in Pakistan (and in India to a certain extent, given the slew of PCTCs intended for HKC green recycling, in addition to a collection of containers sold there recently), so it may be that focus has finally started to shift to an emerging Bangladeshi market in the months to come,” GMS concluded.
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Source: Hellenic Shipping News