Steel prices hiked revenue for recycling yards thanks to the Delta variant
The current cruel business climate led to businesses getting desperate for funds. The only way for shipowners will be to convert their assets to capital – vessel scrapping. Though the normal practice is after 20 years of usage, some shipowners are driven to bring it forward to keep expenses updated.
Delta variant as cash cow?
London-based shipbroker Gibson reported the sale for recycling of two very large crude carriers (VLCCs), the 298, 000dwt Sea Coral (1996) and the 310, 000dwt Jubilee Star (1996), both deployed on floating storage contracts until recently off Malaysia. The tankers were sold for $578/ldt and $576/ldt respectively, yielding close to $25 million a unit. It added that floating storage requirements have fallen sharply since the peak in June 2020. At that time, the broker logged 77 non-Iranian VLCCs deployed on floating storage contracts, compared to just 30 this year.
What was notable was ship buyer, GMS’ recording of ship recycling markets in Bangladesh, India and Pakistan. The firm said, “Despite the devastating recent toll the Delta variant has taken, beachings and deliveries have continued to remain unabated for a large part of the year.” Additionally, recycling prices rose to their highest levels since 2008. Although slightly softer, the prices look set to remain firm for most H2 2021.
Prices confirmed so
GMS’ estimated guideline prices in Bangladesh the week before to be at $610 for large cargo vessels, $600 for tankers, and $590 for bulk carriers. Typical prices in Pakistan lagged by $10 across the board, with Indian levels a further $20 down. Meanwhile in Turkey, where most Aliaga facilities are full, typical prices were around $300, $290, and $280 for the three ship types respectively.
India is currently the hardest hit with 32 million cases. Neighbours like Bangladesh and Pakistan share similar numbers at 1.4 million and 1.1 million cases respectively. The Delta Variant has obviously taken on another role – cash cow. Businesses driven to raise capital by converting their assets into cash has a rejuvenating effect on steel prices. However, not every shipowner has the luxury of giving up vessels to raise capital, not for those who own small fleets at least.
Marine Online News Team
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