Ship recyclers facing ‘horror movie’ of a summer

Indicative prices continued to drift downwards last week amid heightened global tensions in the Middle East and cheap Chinese imports undermining steel prices on the Indian subcontinent. Further anti-dumping duties are clearly needed in order to curb cheaper steel imports from undercutting inventories at domestic yards, creating more headaches for local recyclers, GMS said in a market update.

The world’s largest cash buyer of end-of-life ships declared that the latest weakness had resulted in a meagre collection of sales relating to Far Eastern-built and owned vessels of poor quality. This has forced indicative prices down below $500 per light displacement ton for some units.  

Bangladeshi buyers have resurfaced after recent political unrest. GMS reports that some Chattogram buyers have letters of credit arrangements in place and can negotiate on units promptly.

However, a wider net of potential buyers consists of parties who are reticent to commit to new tonnage due to financial restrictions of their own, the unstable political climate, and the risks of opening letters of credit on incoming vessels. All this, GMS said, was set against a backdrop of basic communication hiccups. The country’s breakers, therefore, are continuing to focus on a series of small Far Eastern vessels.

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India, second in the recycling price league, are watching global and domestic developments carefully. Their strategy is focusing on recycling candidates of higher quality including reefers, stainless steel units, and Hong Kong Convention-only units.

GMS’ most recent price estimates place Bangladeshi breakers in the lead, with indications of $530 for container ships, $520 for tankers, and $500 for bulk carriers. Second place Indian yards are $10 down across the board; and Pakistani breakers down a further $10.

With no activity in Turkey, where inflation logged 62% in July, down from 71% in June, theoretical prices have not changed – $380 for container ships, $370 for tankers, and $360 for bulkers.