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Currency and plate prices force Pakistani recyclers onto back foot

Article-Currency and plate prices force Pakistani recyclers onto back foot

Photo: GMS ship_recyling_worker-gms.jpg
Pakistan’s ship recyclers face challenging weeks ahead following the alarming 9% fall in the rupee one day last week and a $64 per tonne collapse in steel plate prices. Elsewhere, the outlook is more positive

The recycling market was bound to be quiet during the Lunar New Year and celebrations around India’s 74th Independence Day. But the outlook in India and Bangladesh looks more positive for the weeks ahead. Pakistani recyclers still find themselves in a bind.

“Until the currency, plate prices and letter of credit issues settle, it appears as though Pakistan will remain out of the buying for the foreseeable future,” GMS concluded in its weekly market report yesterday.  

The world’s largest cash buyer of end-of-life ships noted that finance issues continue to beset Bangladeshi recyclers too. They are trying to bypass government banks which are refusing to open non-essential letters of credit (LOS) and are turning to private finance or usance LOCs – a means of deferring payment.

So most of this month’s action has focused on the Indian market where the rupee has been trading more steadily against the dollar – up from around 83 to the mid-81s, GMS said. Following a bleak spell for the market, buyers there are gearing up for a busier year and sentiment is positive at the outlook of filling empty plots in the weeks ahead.

More container vessels have been sold for demolition with potential deals on older survey-due bulk carriers also on the cards. Indian yards are well-placed, with no fewer 97 recycling facilities having been vetted and approved by IACS classification societies, capital providers, and recycling specialists.

Unsurprisingly, therefore, it is that country’s recyclers who are paying the best prices. Although there were no sales reported last week, GMS’ latest estimates indicate that Indian yards could typically pay $565 per light displacement ton for container tonnage; $555 for tankers; and $545 for bulk carriers.

Bangladeshi buyers trail the leaders by about five dollars across the board and, if Pakistani recyclers were in a position to put a deal together, they might pay a further $15 less for the three ship types.  

Meanwhile, although no recycling sales have been reported in Aliaga, negotiations on spring deliveries are in progress. GMS estimates likely Turkish prices for the three ship types at $320, $310 and $300 respectively. 

TAGS: Asia recycling
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