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Recycling prices ease but should hold firm

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Supporting factors are expected to stop prices paid at ship recycling facilities from falling much further, according to industry sources.

A halt in the recent decline in steel plate prices and a shortage of recycling units are two factors that are likely to prevent the marginally softer recycling prices of recent days from slipping much further, according to GMS, the world’s largest cash buyer of end-of-life ships.

The Indian market, which has trailed Bangladesh and Pakistan recently, looked steady last week on the back of more stable steel prices. However, with fewer vessels proposed, there were no sales and only time will tell whether prices continue to ease. India’s recycling yards, 92 of which have been validated by major classification societies under the requirements of the IMO’s Hong Kong Convention, are the destinations of choice for shipowners who require green recycling procedures.

London shipbroker, Gibson, has reported the sale for recycling of two VLCCs, the 298,000dwt Sea Coral (1996) and the 310,000dwt Jubilee Star (1996), both deployed on floating storage contracts until recently off Malaysia. The tankers were sold for $578/ldt and $576/ldt respectively, yielding close to $25m apiece.

Gibson pointed out that floating storage requirements have fallen sharply since the peak in June last year. At that time, the broker logged 77 non-Iranian VLCCs deployed on floating storage contracts, compared with just 30 today.

Meanwhile, in its latest weekly report, GMS noted the remarkable resilience of the principal subcontinent recycling markets in Bangladesh, India, and Pakistan, in spite of the impact of the pandemic. “Despite the devastating recent toll the Delta variant has taken, beachings and deliveries have continued unabated for a large part of the year,” the firm said. Against this backdrop, recycling prices rose to their highest levels since 2008 and, although slightly softer, look set to remain firm for most of the rest of the year.

Despite the low number of recycling deals concluded in recent days, GMS estimated guideline prices in Bangladesh last week at $610 for containers, $600 for tankers, and $590 for bulk carriers. Typical prices in Pakistan lagged by ten dollars across the board, with Indian levels a further twenty dollars down. Meanwhile, in Turkey, where most Aliaga facilities are full, typical prices were around $300, $290, and $280 for the three ship types respectively.

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