Recycling markets pause again as freight markets stay firm

It will also take some time for the impact of IMO carbon intensity regulations to be felt and in the meantime, older ships across various sectors are earning good returns for their owners.

The recycling market is likely to remain relatively quiet over the weeks ahead. Firm freight markets and the approach of the monsoon season are likely to offset the usual bounce that often follows the end of Ramadan.

According to the latest weekly report from GMS, the world’s largest cash buyer of end-of-life ships, volatile steel plate prices have not helped, with potential buyers adopting a wait-and-see approach. This has come as a surprise to some market watchers who were expecting a ‘busy and bullish start to 2023’, GMS said.

Finance remains an issue, however, in both Bangladesh and Pakistan. Recyclers must undergo lengthy central state bank approval processes to open new letters of credit, and this is certainly a deterrent for high ldt ships. GMS warns that it will also mean delays on vessel delivery times. Patience will certainly be required from owners and cash buyers seeking to deliver units in the weeks ahead, the firm said.

No sales were reported in India, Pakistan or Turkey last week, according to GMS data. However, Bangladesh bucked the trend, with three cracking sales of low ldt ships reported. These were the 32-year-old general cargo ship Atlantic Ray, 2,461 ldt, built in Turkey and with a steel propeller, which went for $620. The 1988-built LPG carrier, Apollo Pacific, 2,188 ldt, achieved $655. And Chinese buyers were able to unload the 6,311 ldt 30-year-old bulker/logger, Ocean Great, for a respectable $575.

However, GMS noted that the strained financial situation in Bangladesh shows little sign of improving. “Time will tell whether central bank permission on these various transactions … will get approval,” the firm said.

Indicative prices from GMS show Bangladesh in pole position – $630 for containers, $610 for tankers, and $590 for bulkers. Corresponding indications in India stand at $600, $580 and $570 respectively, and in Pakistan $560, $550 and $540. The Turkish market lags behind as usual, with typical prices of $350, $340 and $330 for the three ship types.

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