The demolition market should be speeding up instead of slowing down, as has been the case over the past couple of weeks, with demand slowing down and supply rising in most shipping markets. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with the accumulation of holidays around the world over the last couple of weeks and the start of Ramadan next week, the market appears to have ground to a halt with little activity to report, evidenced by the lack of reported sales. The main benefit of this stagnant scenario is that with a relatively slow supply on the horizon, and thus tonnage not saturating the recycling destinations, it may provide some respite to the crowded yards in Bangladesh which has swallowed up the majority of tonnage this year, particularly as Ramadan brings a slowdown in the dismantling activities on the recycling yards. In what is looking set be a subdued period over the next few months with not only Ramadan, but also elections, budgets and the seasonal monsoon season all set to cause disruption across all three of the major ship recycling destinations in the Indian Subcontinent, general appetite for tonnage and activity could col off for the foreseeable future”, the shipbroker said.
In a separate note, shipbroker Intermodal added that “the demolition market has seen a slowdown in activity compared to the week prior, with prices in the Indian subcontinent moving down at the end of April but managing to stabilize in the past week. The approaching monsoon season seems to be keeping the appetite of Bangladeshi buyers in check at the moment, while at the same time the ongoing elections in India have pushed buyers there on the sidelines with no imminent reason for this trend to change as the results will be known at the end of the month. The market in Pakistan also remains fairly quiet, with the recent uptick in bids coming out of the country having made almost no difference in terms of candidates secured by domestic buyers. We do expect to see a further slowdown in activity in the next couple of weeks, which will most probably negatively impact prices sooner rather than later. Average prices in the different markets this week for tankers ranged between $280-450/ldt and those for dry bulk units between $270-445/ldt”, said the shipbroker.
Meanwhile, in a separate note, GMS, the world’s leading cash buyer added that “activity seems to be slowing this week as the cut-off date for the budget in Bangladesh and the incoming monsoon season seem to overall hamper End Buyer offers and have considerably curtailed demand for later deliveries. Indeed, the weather has already started to take a turn for the worse as cyclone Fani batters the East Indian & Bangladeshi coasts this week. Moreover, towage jobs will struggle to be approved from a Marine Warranty Surveyor / insurance perspective. So inevitably, there will be the much-expected slowdown in supply for vessels arriving into the subcontinent. Also, during the seemingly unending rains of the monsoon season, many laborers return to their home towns as production on the yards slows due to the constant rains (hampering cutting / recycling activities), as much of the tonnage imported during the first half of the year gets gradually absorbed into the respective local markets. There are also the upcoming Indian elections to consider as many are hoping that the probusiness Mr. Modi gets re-elected (which should be good for steel prices, currency and the ship recycling industry in general), but there has been the nagging suspicion that moods are beginning to shift and an unexpected surprise could well be on the cards. Pakistan too remains firmly on the sidelines for another week and these are indeed troubled times for a once vibrant industry, with virtually no new vessels being imported this year (only smaller LDT general cargo vessels) as the currency too continues to struggle and steel mills close locally. Finally, Turkey remains strung, suspended for the third straight week with no change in the comparatively weakened steel plate prices, a depreciated Turkish Lira that’s about to breach the TRY 6.0 mark, and an overall nervous sentiment, all of which have been exacerbated by a shortage of available tonnage. As such, there remains little this market is able to do at this moment”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide