India stages modest ship recycling recovery

Despite the Indian rupee’s decline of close to 20 basis points against the dollar last week, the country’s recyclers were back in business after a lengthy period of inactivity. Local steel prices rose by about $10 per ton over the week, contributing to an increase in recycling prices up by about $20 per light displacement ton in the space of a few days.

According to the latest market report from GMS, the world’s largest cash buyer of end-of-life ships, a bulker sale in India that achieved the same price as a container ship a week earlier was a sign of improving sentiment. The 6,918 ldt Meray, built in Japan in 1992, was sold at $490 per ldt, admittedly with 150 tonnes of bunker remaining on board. However, this was notable because just a week before, MSC had achieved a price of around this level with a container ship and more fuel on board.

This modest Indian recovery, however, is not evident elsewhere, at least so far. Widespread flooding in Bangladesh, a haphazard takeover by the interim government following the abdication of PM Sheikh Hasina,  weak steel prices, and falling dollar reserves in advance of upcoming IMF payments are all factors weighing on the sector, GMS said.

Meanwhile, Pakistani buyers are contending with cheap steel imports from China which significantly undercut domestic steel prices which dropped by more than $11 over the week. GMS said this was a key barrier to new deals. And, unlike India, the Pakistani government has not imposed tariffs on the cheap Chinese steel. Other negatives in Pakistan include liquidity and letter of credit issues and an unstable currency.

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Activity in Turkey remains limited and sadly there was a casualty at a recycling facility in Aliaga last week. This highlighted yet again that safety standards for ship recycling across the world need improvement, GMS said, regardless of which continent they may reside on, or what governance may apply. Meanwhile the Turkish economy remains in dire straits.

GMS’ indicative prices show India ahead on price with indications of $510 per light displacement ton for containers, $500 for tankers, and $480 for bulk carriers. Bangladesh are ten dollars down across the board, with Pakistan lower by a further ten dollars. Prices prevailing in Turkey are $330, $320 and $310 respectively GMS said.