Ships’ demolition market still looking for its 2019 footing - Clarkson
Mr Nikos Roussanoglou of Hellenic Shipping News Worldwide wrote, while 2018 was a year of near record scrapping, especially in segments like tankers or containers, it seems that the demolition market is still in limbo after the first month of 2019 has gone by. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “we end the week on a mixed note with the lack of demand from the waterfront at India and Pakistan still apparent as the local steel mills are reportedly operating at their minimum production output. This further emphasizes the economic slowdown which is being experienced across the globe at the beginning of this year. Despite the negative mood, some cash buyers with little tonnage in hand appear keen to acquire a unit to speculate with the end users, provided of course, the purchase price is right for them. Most of these units are earmarked for the Bangladeshi shores due to this destination being the only area with, currently, significant interest to purchase. However, with the heavy influx of tankers towards the end of last year, there now appears to be limited yard space in Chittagong which gives indications that a price correction southward is a possibility. It would certainly need their counterparts in Pakistan and India to return to the market in an aggressive manner to avoid this potential pitfall. It is expected that the market will continue in this ‘limp form’ until after the Chinese New Year when it will be known for sure whether the predicted mass supply of cheap steel export to the Indian sub. Continent and Turkish markets materialize as this concern is certainly on the recycler’s minds”.
In a separate report, Allied Shipbroking added that it was “a rather interesting week for the ship recycling market, with a considerable flow of candidates being seen and a fair amount of reported transactions taking place. While the market has been on a rather sluggish mode for a long period (with some exceptions in-between), it is encouraging to see once again some sort of shift being noted in the overall trends. It is yet to be seen if the upward momentum will continue further over the coming weeks. On the other hand, things in the Indian Sub-Continent remain rather troubling, with most being left with perplexed feelings. The good thing is that we witness a sort of easing from the excess inventory noted in the market, a situation that may boost activity in a positive way over the coming days. Furthermore, given the poor freight performance noted of late, it won’t be surprising to see activity shift towards more dry bulk units. FurtheMr Nikos Roussanoglou of Hellenic Shipping News Worldwide wrote, while 2018 was a year of near record scrapping, especially in segments like tankers or containers, it seems that the demolition market is still in limbo after the first month of 2019 has gone by. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “we end the week on a mixed note with the lack of demand from the waterfront at India and Pakistan still apparent as the local steel mills are reportedly operating at their minimum production output. This further emphasizes the economic slowdown which is being experienced across the globe at the beginning of this year. Despite the negative mood, some cash buyers with little tonnage in hand appear keen to acquire a unit to speculate with the end users, provided of course, the purchase price is right for them. Most of these units are earmarked for the Bangladeshi shores due to this destination being the only area with, currently, significant interest to purchase. However, with the heavy influx of tankers towards the end of last year, there now appears to be limited yard space in Chittagong which gives indications that a price correction southward is a possibility. It would certainly need their counterparts in Pakistan and India to return to the market in an aggressive manner to avoid this potential pitfall. It is expected that the market will continue in this ‘limp form’ until after the Chinese New Year when it will be known for sure whether the predicted mass supply of cheap steel export to the Indian sub. Continent and Turkish markets materialize as this concern is certainly on the recycler’s minds”.
In a separate report, Allied Shipbroking added that it was “a rather interesting week for the ship recycling market, with a considerable flow of candidates being seen and a fair amount of reported transactions taking place. While the market has been on a rather sluggish mode for a long period (with some exceptions in-between), it is encouraging to see once again some sort of shift being noted in the overall trends. It is yet to be seen if the upward momentum will continue further over the coming weeks. On the other hand, things in the Indian Sub-Continent remain rather troubling, with most being left with perplexed feelings. The good thing is that we witness a sort of easing from the excess inventory noted in the market, a situation that may boost activity in a positive way over the coming days. Furthermore, given the poor freight performance noted of late, it won’t be surprising to see activity shift towards more dry bulk units. Furthermore to this, given that offered prices levels are holding off relatively well, it could well drive this option further for most owners of vintage tonnage”.
Meanwhile, in its own weekly report, GMS, the world’s leading cash buyer said that “since the advent of 2019, the declines witnessed across the Indian subcontinent markets have shown no signs of abating and increasingly desperate Cash Buyers finally started to offload their hefty existing (and expensive) inventories at ever decreasing rates. As such, as evident from this week’s massive port report (See Page 8), Bangladesh has started to rapidly fill up with tonnage and with India and Pakistan positioned some way below, the supply into Chittagong is expected to continue as long as demand / available space remains. The results of the mini-budget announced in Pakistan have been distinctly underwhelming, with very little material change to report (as expected) and it is hoped that this could present a long overdue bounce back from Gadani in the near future. Meanwhile, the prospects in India remain ever-so bleak with further volatility / declines in local steel plate prices, in addition to an evaporating demand that has lead to a rapidly disappearing rate of local offers, as Alang Buyers wait and watch the flow of tonnage, in an attempt to grab a green bargain or a lower priced offshore asset. Much of the focus has therefore remained on Bangladesh (where prices remain far firmer) to pick up the slack for yet another week and a whole array of Cash Buyer tonnage (big and small, containers and capes) has been committed to a dwindling array of capable (in terms of ready L/Cs) and open (in terms of plot capacity) end Buyers. Finally, the Turkish market continues to fester away amidst stagnating local steel plate prices, a relatively unchanged Lira / US$ value, and a lack of incoming units, which has pushed local Recyclers to adopt a Bangladeshi strategy in an attempt to revive the Turkish ship recycling sector. Will it work? Overall, the supply, particularly in the container sector, seems to be continuing and this may put further downward pressure on prices going into the Chinese New Year, which is right around the corner”, GMS concluded.