Dearth of tonnage drives ship recyclers to chase small vessels

Bangladeshi breakers lead the way, followed closely by recyclers in Pakistan, but they are bidding on low-quality units with components already removed, poor steel, corroded ballast tanks and permanent ballast., according to GMS, the world’s largest cash buyer of end-of-life ships.

Despite this gloomy backdrop, prices remain firm. The lifting of restrictions on letters of credit has enabled Bangladeshi recyclers to nail a number of units including two small bulk carriers, ‘as is’ in Singapore. The 6,537ldt Lian Feng 6, and the 6,003ldt Yamtai were closed at relatively firm levels – $520 per ldt and $480 per ldt  respectively, GMS said. Meanwhile, the laid-up 2007-built Chinese feeder container, Far East Cheers, 3,651ldt, was committed at $530 on a delivered basis.

No sales were reported in Pakistan but an easing of restrictions on letters of credit there too is enabling potential buyers to offer prices close to those prevailing in Bangladesh, GMS said.

However, a key focus among the country’s recyclers is the Hong Kong Convention, due to enter force in just 16 months. As a recent signatory, Pakistani yards must upgrade standards and invest in infrastructure, both to meet HK Convention requirements and to keep pace with improving standards in India and Bangladesh.

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There were no sales in India either. Following a spate of Hong Kong Convention container ships in January, Alang has turned into a ‘ghost town’, GMS said, with a shortage of tonnage supply not seen in decades. This should technically be driving demand and prices, but it is not.

Stubbornly high inflation is proving a headache in Turkey as the lira/dollar exchange rate closed the week close to TRY32. Meanwhile, import and local steel prices declined by about $10 and $5 respectively, GMS said. Recycling yards in Aliaga must not only contend with the country’s own economic woes, but also the fact that prices in at least two subcontinent locations remain firm. No sales were reported in Turkey.

Bangladesh led the league table in week 10, with indicative prices of $550 for containers, $530 for tankers, and $510 for bulk carriers. Pakistan breakers were ten dollars behind across the board, and a weak market in India was theoretically down by a further $20. Prices prevailing in Turkey were $340, $330, and $320 respectively.