The demolition market has finally seen some action after a few weeks of limited activity and lack of available tonnage. In its latest weekly report, shipbroker Clarkson Platou Hellas said that āafter having seen some barren weeks in the recycling field, due to the improving freight markets and steadily rising second-hand values, there was finally something to get excited about with some large and interesting units circulated for sale. These vessels were met with an increasingly set of starved cash / end buyers, who seemed to burst into life as the magic 500/ldt price was smashed, to the delight of the Owner. This also meant we saw the first VLCC sold so far this year which is encouraging for future sentiment. Perhaps the interest for alternative trades for older VLCC units has slowed! However, willing Sellers will have to be quick to benefit from these impressive numbers as the religious month of Ramadan is slowly approaching which is strongly observed in the Indian sub-continent and will affect sentiment in the industry and deliveries at the end of April ā early May as many industry stake holders start to slow down their operations. There were nervous eyes towards Turkey at the beginning of the week as President Erdogan unexpectedly chose to displace the countryās central banking Governor which rippled through the money markets and caused the Lira to lose up to 15% against the US Dollar. There has been some small recovery this week but the full extent, on local prices and inquiry is not yet known ā this will certainly be a market that will need be closely watched over the coming days!ā, Clarkson Platou Hellas concluded.
In a separate weekly note, Allied Shpbroking said that āan interesting week for the ship recycling market took place, given the good activity levels as of late, as well as, the plentiful availability of demo candidates flowing into the market. Moreover, thinking bout the upward momentum in offered scrap price levels, it seems as though the competition amongst the main demo destinations in the Indian Sub-Continent has been on the rise as of late. More specifically, Bangladesh remains at the top of the leader board and most influential market in the region, having concluded some high-priced units as of late.
India has improved considerably, given the better fundamentals noted there of late, that may well prove very competitive the upcoming months. However an increasing number of COVID cases and a new set of lock down measures could prove to be a dampener in the short-run. Pakistan is following closely, with some very high offered price levels but having failed recently to conclude some large LDT units. It is yet to be seen, if offered numbers can be pushed much higher in the near term, though given the overall state of the global steel products market, some extra wiggle room may be at handā.
Meanwhile,Ā GMSĀ , the worldās leading cash buyer of ships said this week that āseveral large LDT sales have taken place this week, as Owners dip in to take advantage of the red hot sub-continent markets of the moment. Almost all of the locations saw some activity this week (market and private), with India even getting in on the act (despite being the lowest placed sub-continent market) with one high-priced stainless-steel tanker purchase registering for the week. With abysmal rates persisting across the sector, VLCCs and FSUs seem to be the types of units mostly in the firing line at present, whilst dry bulk and containers continue to soar. FSUs in particular are extremely difficult vessels to deal with for recycling, due to the massive amounts of sludge remaining on board and a sub-continent hot works standards being far more stringent these days to allow entry with all cargo holds, slops tanks and cargo lines required to be totally free of all cargo residues, slops and sludges and flushed clean to avoid any accidents during the recycling phase.
Therefore, FSUs become a position on the forward market as cleaning / removal of usually over 1,000 Tons if sludges can take over 3 weeks and no End Buyer is willing to work / wait on a vessel with a 2 month forward delivery time frame, especially as markets remain overheated at present and with every chance of cooling off as we approach the monsoon / summer months. On the other end, the Turkish market went through a tumultuous time as the Lira and steel fundamentals, both declined over the last week. Overall, we are witnessing the highest-priced rates seen across the sub-continent for a number of years, with several sales taking place above USD 500/LT LDT on decent spec units. Notwithstanding, whether this lasts for a period of time remains to be seen, with the volatility we have regularly witnessed this year, always likely to strikeā, GMS concluded.
