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Demo rates hit decade highs

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Ship recyclers on the Indian subcontinent are paying some of the highest prices in more than a decade, following the end of Ramadan and the Eid holidays.

Tankers and offshore vessels, including two FPSOs, have been amongst recent sales, with prices in market-leading Bangladesh typically around $550 per ldt, according to the weekly report from GMS, the world’s largest buyer of ships for cash.

Owners of container and dry bulk tonnage continue to make the most of booming markets and there are virtually no candidates available for recycling from either of these two sectors. The most recent GMS port position report comprises ten tankers as well as three OSVs and three drilling units.

The 47,887 ldt FPSO, Berge Helene, was beached in Alang on May 15, according to GMS. The BW Offshore-owned unit had been laid up in Singapore since August 2018 prior to the recycling sale, reported at $16m. A second FPSO, the 23,577 ldt Perisai Kamelia, owned by Malaysia’s Perisai Petroleum, arrived in Gadani on May 18 but no price details were available.

Analysts are doubtful that today’s stellar prices can be sustained, however. Not only is Covid-19 wreaking havoc across recycling facilities in all three recycling centres, but steel plate prices have also eased in recent days. In the medium to longer term, some experts expect a clear-out of older tankers and bulk carriers as the impact of IMO’s EEXI and CII indices becomes clear. An influx of tonnage could well result in a buyers’ market and lower prices.

For the moment, though, tanker owners with tonnage to offload can generate an attractive end-of-life return. According to GMS price indications, the $550 price in Bangladesh is only $10 higher than typical Pakistan prices but now commands a $40 premium over the $510 level that could be available in India. For container ships, typical prices prevailing in Bangladesh are $560, $550 in Pakistan and $520 in India. Bulk carrier prices are around $540, $530, and $500 respectively.

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