Recycling rates remain flat as ships trade on in uncertain markets

Tankers rates have risen sharply, old container ships are being retained for further trading, and firm bulk carrier charters have all been surprise developments in the early weeks of the year.

The recent general election in Bangladesh appears to have eased recent restrictions on letters of credit, according to this week’s report from GMS, the world’s largest cash buyer of end-of-life ships. However, despite more access to finance, Chattogram recyclers find that there are very few scrap candidates to choose from.

Meanwhile, Pakistani recyclers are understood to have more access to letter of credit following a January  disbursement of $700 million, part of an IMF loan agreement of $3 billion. But Gadani breakers are also scouring the market for tonnage, with little success.

There are virtually no ships heading for beaches in Alang, GMS said. This is partly also down to market factors, but also because Indian recyclers are offering significantly lower rates, relying on more Hong Kong Convention ships which command lower prices.

In the only other recycling market of note, Turkish recyclers were wrestling with a weaker currency. This only added to the challenge of a lack of scrap candidates.

According to GMS price indications, Bangladesh heads the league table with typical prices of $550 per light displacement ton (ldt) for container ships, $530 for tankers, and $510 for bulk carriers. Pakistan is about $10 lower  across the range. According to GMS, sentiment in both markets is ‘improving’.

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Indicative Indian prices were $520, $500, and $480 per ldt respectively, with Turkish yards at $360, $350, and $340 per ldt.