Recycling rates likely to break through $600 per ldt soon

Prices have doubled over the last year, reaching record levels that could soon breach the $600 mark, according to the latest report from GMS, the world’s largest cash buyer of end-of-life ships.

“Not since the heady days of 2008 have we seen such consistently firm levels on scrap prices,” the firm noted. “It will be interesting to see how much longer this trend persists, with many analysts predicting that this ongoing ‘super-cycle’ may be set to end at some point before the end of the year. [The market] could eventually turn tumultuous at that time, for shipowners and cash buyers alike.”

Yards are still focusing on tankers and offshore units, GMS said, since dry bulk and containership owners are making the most of the bull market. However, industry sources suggest that the picture could change as the impact of regulations, particularly for older ships, alters the economics. The IMO’s ballast water installation requirements and carbon intensity indicator compliance are just two of these.  

Indian buyers still lag behind those in Pakistan and Bangladesh, GMS said, with new deals remaining tentative for the moment. Meanwhile, Bangladesh has entered another hard lockdown, with offices closed and residents told not to leave their homes in a move aimed at preventing the spread of the Delta variant.

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Pakistani buyers currently lead the way, paying typical prices of $580 per ldt for containerships; ten less for tankers; and a further ten for bulk carriers. Representative prices in Bangladesh are ten dollars lower across the board, with a further $20 discount in typical Indian prices.

Meanwhile, GMS describes prices in Turkey as ‘steady’, with typical prevailing prices for the three ship types at $300, $290 and $280 respectively.