Shipping Demolition Activity Crawls to a Halt as Lack of Tonnage is More Than Evident

An apparent lack of tonnage has led to a difficult situation in the demolition market. In its latest weekly report, shipbroker Clarkson Platou Hellas noted that “as we approach the summer and looming monsoon season, the lack of tonnage over the past weeks has been alarmingly low, but surprisingly, price levels remain on the wane. The incredible amount of rallying and enthusiasm the market has witnessed over recent weeks appears to have subsided. There are no indications of a majorly softening in rates, just a lack of buying interest reportedly from the actual breakers (recyclers). Following the weakening of India last week, it now appears Bangladesh has followed suit with the Takka falling 10% over the past week against the improving US dollar, this correction will temporarily affect recyclers buying power and sentiment. Cash Buyers will therefore be speculating on a pre-budget and pre-monsoon surge, with future optimism that the market maintains an aggressive stance. The forthcoming weeks could be interesting where the recyclers start to dictate conditions! They are no sales to report”, concluded Clarkson Platou Hellas.

On a similar note, the world’s leading cash buyer, GMS, said that “the last week of April was another troubling week for the Indian sub-continent shiprecycling sector, with dampening demand and continually softening levels across the board, as prices struggle to find any sort of footing. Local sentiments have turned sour as many end buyers fear further and imminent falls in the days / weeks ahead. As such, motivation to offer any firm numbers practically vanished this week, even at levels below those existing in the market today. With such lackluster demand and offerings, it seems as though monsoon in the sub-continent has come early this year. With several large LDT and high-priced inventory still unsold in cash buyer hands, all are certainly hoping for some form of market recovery sooner rather than later, in order to at least breakeven (if not minimize their losses) on their trades. Logically, demand and pricing should be improving going into the final month before the rainy weather sets in and budgets / Ramadan commence in Pakistan and Bangladesh at the end of May / early June. However, given that the recycling markets are known to dish out their share of “curve balls”, one can only hope for the best – especially considering that the markets have finally witnessed some sort of strength this year (as compared to the same time in 2016). While improving steel plate prices could certainly help firm up the markets in the weeks ahead, one factor that will certainly help is a slowdown in the supply of vessels to subcontinent shores and with charter rates currently enjoying a healthy revival, this is likely expected to be the case”, GMS noted.