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Monsoon season dampens weak ship recycling market

Photo: GMS shiprecycling-workers-GMS.jpg
The rainy season continues to undermine weak Indian subcontinent markets suffering from a lack of tonnage and financing issues. As a result, prices continued to drift downwards last week with deals now under discussion at prices below $500 per light displacement ton.

Not a single vessel has been beached in Gadani since January, according to the latest weekly report from GMS, the world’s largest cash buyer of end-of-life ships. The main obstacle in Pakistan has been unwillingness on the part of the Central Bank to provide letters of credit, particularly for larger vessels.

However, GMS notes that the first few letters of credit have now been approved and financially executed. The imminent end to the rains could lead to brighter days, the firm suggests.

Meanwhile, in India, the 1998-built panamax bulk carrier, Gloria 1, is likely to fetch $517 per ldt, a firm price in the current market. The deal is not finalised yet, however, and could have a Pakistan or Bangladesh option if buyers with suitable financial backing are available, according to GMS.

Other transactions include the likely sale of two elderly reefers by Greece’s Laskarides. The Frio Olympic, built in 1988, and the Zefyros Reefer, 1990, both of about 4,700 ldt, are committed at $510 per ldt en bloc.

Meanwhile, eight vessels have been beached in Chattogram over the last two weeks, indicating that this market may stay quiet for a while. Few local buyers with access to valid letters of credit have access to more financing at present. A waiting game is likely, GMS suggests, to see when and where business resumes after the rains. 

On pricing, Pakistan heads the leader board, according to GMS estimates, with containers at a nominal $540, tankers $520, and bulk carriers $500. India and Bangladesh follow at $10 and $20 less respectively. Corresponding price estimates in Turkey are $320, 310 and $300.

TAGS: Asia