Recycling prices rise again amid shortage of demo tonnageRecycling prices rise again amid shortage of demo tonnage

As most shipping sectors remain buoyant, a shortage of tonnage is helping to shore up prices, but a couple of large elderly tankers have appeared as potential sale candidates in recent days, according to the latest market report from GMS, the world’s largest cash buyer of end-of-life ships.

However, as Singapore-based ship recycling consultancy, Sea Sentinels, warned recently, there is a shortage of Hong Kong Convention (HKC) compliant yards with capacity for the dismantling of large vessels. Many facilities in India have either achieved or are working on HKC compliance, but only one yard in Bangladesh is thought to have the necessary Statement of Compliance, and none yet in Pakistan.

Major classification societies including Bureau Veritas, ClassNK, Indian Register of Shipping, Lloyd’s Register and RINA have been engaged in validating yards for HKC-compliance purposes although DNV opted not to pursue this line of business. For EU owners, or vessels sailing from EU ports, however, the recycling yards for which they are bound must have been audited and certified under the EU Ship Recycling Regulation (EU SRR).

So far, no yard on the Indian subcontinent has been granted such validation. For many owners of large assets, therefore, there are limited options when it comes to end-of-life disposal.

Related:Spotlight on sustainable recycling as capacity constraints loom

According to GMS’ latest estimates, Bangladesh recyclers are still leading the pack, typically paying prices of $640 for container ships, $630 for tankers, and $620 for bulk carriers. However, in one spectacular deal last week, the 2003-built 19,105-ldt Aframax, Petrogaruda, was sold at $650, netting around $12 million.

Pakistan comes next, with prices about ten dollars less across the three sectors. India comes third, with a further twenty-dollar discount. GMS notes, however, that prices are rising in all three locations.

Meanwhile, prices are climbing too in Turkey where a number of recycling facilities already meet EU SRR requirements. Buyers there are on the lookout for more recycling candidates as weather conditions improve after winter, enabling some ships to arrive under tow.

GMS questions whether $400 per ldt is really a possibility in the months ahead but, for the moment, typical prevailing prices are around $350 for containers, $340 for tankers, and $330 for bulkers.