With the fragility in the dry bulk market’s recovery already noted and the rebound in the tanker market both hinging in solid levels of ships’ scrapping, as well as newbuilding delivery delays and slippages, the demolition activity so far in 2018 doesn’t seem to bode well for the future. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with yet again another stagnate week in the recycling market, at least we had the Indian budget to wait for, although the usual anticipation and hype usually seen appeared to have drifted this year with most Buyers waiting to see what was announced without any annual pre-speculating. Not surprising, the announcement was made and there has been no change in relation to the ship recycling sector with all duties/taxes etc. remaining untouched. Again we have experienced a large volume of ship names being pushed into the market but as there remains a distinct lack of workable tonnage entering the scene, and whilst buying interest from the waterfront is evident, it would appear that it is difficult for buyers to operate at the over inflated prices witnessed in recent weeks in addition to Owners current ‘optimistic’ price ideas”.
In a separate weekly note, Allied Shipbroking said that “these past few days, things in the ship recycling market seemed to be slowly easing, putting a stop to the increased level of speculative buying that had taken place during the past month. This slow down in activity, could well be primarily driven by a slack in candidates coming to market, something that seems to have coincided with a point were buyers are lacking strong interest for intense competition. In the Indian Sub-Continent, after a couple of weeks of increased activity and a sharp rise in prices, things seem to have settled down, with appetite seemingly covered in its most part for the time being and a general easing in price levels now looming as a possibility given the recent gap that has emerged between cash buyers and end buyers. On the other hand given that after the 6% hike in local steel prices by major steel mills, the expectation is for further price increases to be noted during the current month, this may well leave room for cash buyers to continue to offer relatively high levels and keep their offers buoyant”, the shipbroker concluded.
Meanwhile, GMS, the world’s leading cash buyer of ships said that “this past week, the markets appeared to apply the necessary brakes as there appeared to be no further weakening in sub-continent prices and sentiment, despite some worries last week given the volatility in local steel plate prices in India and Bangladesh and a halt to high rise construction projects in Pakistan on the back of an order from the Supreme Court. Additionally, the Indian budget came and went this week, without any real fanfare or even any pre-budget paranoia of post-budget price reductions that have historically affected local demand. On the contrary, there was no direct impact to the domestic ship-recycling sector and as supply of meaningful tonnage dwindled for another week, demand for vessels appears to be creeping up in India as Cash Buyers scramble to secure any available tonnage at continually puzzling prices.
On the sales front, news that another VLCC has reportedly been committed at increasingly buoyant numbers came forth this week. If true, that would make it 5 units being sold for 2018 and several that still remain unsold in various Cash Buyer inventories. As such, it will certainly be interesting to see where each unit eventually ends up and whether the concerned Cash Buyers are in fact speculating on the much talked about Pakistan re-opening for tankers. Bearing in mind the recent (loss-making) Capesize bulker sale into Pakistan and the gulf in prices between decent LDT tankers and dry units (almost USD 50/LDT!), it is surprising that even more pressure has not been placed on the PSBA and Pakistani authorities to finally permit the import of wet units into Gadani once again. At this time, there are only a select few recyclers in Bangladesh who have the appetite and financial ability to open LCs large enough for a VLCC, as Indian Buyers tend to prefer comparatively smaller lightweight vessels where they can import, quickly cut and move onto the next ship, given India’s generally volatile local fundamentals (steel prices and currency)”, GMS concluded.
Source: Hellenic Shipping News.