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Suezmax sale suggests recyclers may be gearing up again

Photo: Leela Modernized ship recycling facility - Leela yard.png
A Suezmax tanker sale and reports of negotiations on big bulkers indicate that recyclers are moving on from a dull season and virtually no transactions.

Last week, the 21,675 ldt Suezmax tanker, Cheval Bleu, is understood to have been sold to Pakistani buyers at a strong $615 per ldt, basis Pakistan redelivery, according to the latest report from GMS, the world’s largest cash buyer of end-of-life ships.

The Gadani breakers are determined to get back to business, GMS noted, despite the desperate situation in the aftermath of drastic flooding. Pakistan and other recycling destinations are ‘poised precariously’, with vulnerable currencies, letter of credit issues, and volatile steel plate prices clouding the waters.

GMS is relatively upbeat, however, suggesting that it could well be a busier final quarter, as owners seek to capitalise on what are still strong prices, despite the $100-plus drop since earlier in the year. “Rates in and around $550-600/ldt are still incredibly firm, given the lows we had witnessed of $250/ldt or so during the early stages of the Covid pandemic,” the firm said.

While the tanker market looks set for a bull run as a result of changing trade patterns and raised tonne-mile demand, the Capesize sector, in particular, appears likely to remain weak. Analysts believe an extended down patch is likely until Chinese demand recovers.

Clarksons Securities records 14 Capesize bulkers sold for recycling so far this year. But, according to the group’s research division, there are still 45 Capesize units older than 20 years, and more than 250 in the 15-20 year range.  

With poor rates forecast for the foreseeable future, ballast water installations now an urgent priority, and IMO carbon efficiency regulations just around the corner, recycling is bound to appear an interesting option for some owners.