What little hope there is for renewed ship scrapping activity lies on the back of tanker owners, as the latest surge in dry bulk freight rates means that older bulkers will likely remain in service for quite some time. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with little market tonnage being negotiated this week following a busy couple of weeks in the recycling industry, rates have remained firm somewhat and a stable period has descended on the market, a rare event this year. With tanker freight rates still not gaining the momentum that is normally expected at this time of year, it will be interesting to see whether some tanker Owners can be tempted to circulate such type of vessel into the market before their vessels turn another year older. It certainly appears from recent sales that Owners will benefit as the positive feedback from the recycling yards continues and demand currently remains ebullient.
A slight dampener edged into the market only today with the news that the Pakistan rupee devalued by almost 5%. It remains to be seen what affect this will have but the majority in the market appear less concerned that any major impact will reflect this. But, as evidenced in the past, some recyclers will use anything to create an advantage for themselves and thus all eyes will certainly fall on the shores of Gadani next week. The saving grace could be the surprisingly low tonnage flow. It is hopeful that the stability now seen will continue with no sudden price corrections. It is also hoped and expected that the Pakistani Government will address this current currency issue to stem any negativity and thus looking towards the end of the year, the indications are that the lack of tonnage may continue but price levels should continue in this current positive vein”, Clarkson Platou Hellas said.
In a separate note, Allied Shipbroking said that “after the skyrocketing volume noted in the ship recycling market during the course of the past two weeks, things have now scaled back significantly. Activity this week drop down to a slow trickle , with ever fewer demo candidates coming to market despite the still enticing price levels being quoted by most of the breakers. Given by the fact that we are close to the year’s end most breakers are likely to intensify their interest and their competition on each and every candidate that comes to market. The main three destinations in the Indian Sub-Continent are that ones driving the recent price spike in the market, with the increased appetite and improved fundamentals having helped support the sharp price hike in scarp steel during this time frame. Turkey has showed some positive movement, both in terms of volume as well as in terms of prices. We are still waiting to see any reaction from China though things seem to be remaining subdued there, with most of the volume it attracts being linked to full green recycling”.
Meanwhile, according to the world’s leading cash buyer, GMS, “the late year pre-Christmas buoyancy witnessed in the sub-continent markets of late continues on from previous weeks, with the sale of a particular Panamax container capturing the attention of much of the industry, for the extraordinary price paid for it. It was only last week that Greek owners Polembros cashed in on the sale of their Aframax and Suezmax tankers at previously unthinkable levels. This week, it was the Greek market in the recycling limelight once again as Goldenport managed to achieve an incredible price that is drawing gradually closer to the USD 475/LDT mark – the first time since the bullish days of early 2015 (and before the crash that saw the market lose nearly half of its value). As such, it would not be surprising to see several more sales take place in a similar vein before 2017 ends (probably even higher), especially as owners eagerly look at opportunities to exploit the current market positivity.
On the flip side, the number of viable candidates remains largely at a trickle (rather than a deluge) and it is this shortage (more than anything) that is permitting the markets to sustain some of the clearly impressive rates witnessed in recent weeks. Meanwhile, local steel plate prices remain firm across the board and even though the currency in Pakistan suffered a surprising and worrying depreciation of about 5% this week, demand has continually improved of late, even after the brief fourth-quarter blip in sentiment / pricing. Notwithstanding, this currency concern in Pakistan is not expected to be a long term hurdle and is linked to a liquidity crisis, which should be alleviated in the next / coming week(s) once the government pumps more cash into the system”, GMS concluded.
Source: Hellenic Shipping News.