The demolition market has been at a near standstill over the past few days, with deals few and far apart, in what signals a slow period. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “as anticipated, activity this week has really slowed with only a handful of units reportedly negotiating and a lack of new candidates being placed in the market. Pakistani and Indian breakers, unlike their counterparts from Bangladesh at this present time, do have interest to acquire tonnage but not at any increased levels, they are waiting for rates to fall back to their own ideas when they will pounce. As highlighted last week, certain political situations are hampering any positive thoughts from the Indian sub. Continent and therefore we do expect to see this triple of activity to continue for the foreseeable future. Sadly, there have been reports of an explosion at a Bangladeshi ship recycling yard that has left two workers dead and five seriously injured on the tanker ‘Kelana 4’ that had arrived at the recycling yard earlier this year. Reports suggest that the explosion was caused by sparks during cutting works, igniting gas. This latest incident may bring safety standards at the Chattogram recycling yards back into question after a similar accident in February this year and the Bangladesh government are sure to face renewed pressure to regulate its ship recycling industry. To finish on a positive note, Malta has become the latest nation to accept the IMO’s treaty for the safe and environmentally friendly recycling of ships in conjunction with the Hong Kong Convention, established 10 years ago. They are now the 12th nation to ratify the Convention which is a further step towards the 15 Nations required as per the first of the three conditions for the Convention’s entry into force. Slowly but surely, the steps are becoming more rapid for the Conventions to be ratified and this latest Nation to accede to the Convention truly reflects the international recognition of the considerable improvements and investments made by the many yards in India, and on a smaller scale, upgrades in Bangladesh”, Clarkson Platou Hellas concluded.
In a separate report, shipbroker Allied Shipbroking noted that “activity in the recycling market has started ease back for most of the main ship types, with limited number of fresh tonnage heading for the scrapyards during this past week. This trend is expected to remain the norm over the coming weeks, especially as we enter the seasonal monsoon period slack. On the other hand, some increased activity was been seen in secondary sectors such as that of offshore and containerships. The fall in activity started from Bangladesh, which looks now to be well stocked for the time being. Uncertainty from the upcoming domestic budget determination seem to have also played their part, leading cash-buyers to re-think their options. However, it is worth mentioning that Bangladeshi breakers are still holding their market lead both in terms of offered prices as well as market share. Meanwhile, elections in India has caused for a lag in buying interest, with the market hoping for more favorable conditions for the recycling industry to be decided after the elections. Pakistani breakers seemed unable to take advantage of the gap in the market, hurt by the significant currency depreciation noted recently”, Allied said.
Meanwhile, GMS, the world’s leading cash buyer said that “some dramatic falls in prices have begun to commence across the subcontinent markets as we enter the traditionally quieter monsoon / summer months. As anticipated for some time now, the Bangladeshi market appears to have reached a breaking point and both, demand & pricing have alarmingly nosedived this week. As port reports from recent months will testify, the market in Chattogram has been absorbing a majority of the market tonnage and is (unsurprisingly) stuffed at present. Whilst India and Pakistan remain open to take new vessels, they do so at much reduced rates and it seems that all subcontinent markets will soon be coalescing into close proximity of one another – in terms of levels which remain only USD 5/LDT apart at present. This makes this weeks’ sales as possible candidates for any of these markets and it will be interesting to see if Pakistan comes back into the picture, after months of being inert since the last quarter of 2018. We also have the upcoming budget in Bangladesh to contend with on June 13th and the elections in India on May 23rd – both factors which could significantly impact the direction of prices for the second half of the year. Finally, Turkey appears to be withering away as the average domestic steel plate prices continue to decline since last week, deteriorating over USD 15/MT, as local sentiment further worsens amidst a pinching shortage of tonnage as prices decline further. In other news, encouragingly, Malta has become the 10th country to officially adopt the Hong Kong Convention (HKC) on the safe and environmentally sound recycling of ships this week. This one is yet another important step towards the 15 countries required, in order to move the official ratification process on”, GMS concluded.