The festive season appeared to have temporarily paused demolition plans
Ship recyclers are ironically feeling some holiday blues as owners put their vessel demolition plans on the backburner, at least till after the holidays.
Waiting deemed a safer approach
Shipbroker Clarkson Platou Hellas observed that recyclers were getting edgy with the lack of available demolition candidates. They remarked, “We are in an odd space at this time despite lower tanker freight rates. Surprisingly, few units are workable and therefore resulted in some owners’ thinking that tanker rates will rebound – incentivising them to wait and see.”
“Dry rates have also weakened, but nowhere near a position that owners will look towards the recycling yards. Therefore, this lack of tonnage supply looks set to continue heading into the new year. In addition, we have also seen price levels from the recyclers negatively correct this week in tangent with the domestic steel markets, and therefore the local steel industries are not giving any encouragement for an increase in the foreseeable future,” the shipbroker summed up.
Intermodal Shipbrokers Company mentioned in a separate note that a fall in steel prices catalysed by a slower demand from China also adversely impacted the demolition market. The broker observed buyers across all the main Indian subcontinent nations lowered their bids week-on-week. Having said that, the decrease in offered scrap levels preceded an overall subdued activity across all demolition markets. The drop in steel plate prices was most pronounced in India, followed by a slight decrease in Bangladesh.
Surprisingly, steel prices were improving week-on-week in Pakistan. On the other hand, buyers are not betting on this long-term. Pakistan’s progressively weakening currency also led buyers to hold back on their demolition plans. Intermodal concluded that despite last week’s loss in demolition offered levels, the shortage of vintage units will limit a sharp drop in buyers’ bids in the foreseeable future. Average scrap prices in the different markets for tankers ranged between US$330-610/light displacement tonnage (ldt) and US$320-600/ldt for dry bulk units.
Marine Online News Team
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