Demand for ship recycling has started to pick up pace during the course of the past week. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “Pakistan certainly seems to be the talk of the town offering the most competitive levels out of the three India sub-Continent destinations, a feat not seen for some time, and continuing to have firm inquiry to purchase units for recycling. With their counterparts elsewhere under certain pressures now, it is hoped that the recyclers in Pakistan continue their aggressive stance and not fall way from their current purchasing activities. Bangladesh continue to develop issues surrounding the opening of their Letters of Credit and thus we may see this area slow down for a short time to allow the recyclers to digest the tonnage in hand having acquired a big volume of larger dry units recently. The Indian market has been inundated with tonnage requiring HKC (Hong Kong Convention) Green recycling recently and this could be the first time that interest to purchase future vessels for Green recycling may slow down due to the large quantity of units already on the recycling yards or due to arrive to Alang. The problem is that whilst the supply continues, the outflow of material/inventory from the yards is extremely slow due to the labour force operating at limited capacity. This could develop into an issue in the next month or two if the slow dismantling process continues. Interestingly, there are still vessels arriving to this destination requiring Green recycling that were originally concluded in January/February this year but obviously were unable to arrive/deliver due to the lockdown. With the workforce operating on most yards at only about 20 pct, some scepticism is now creeping into the market in relation to the future months at Alang, especially with the monsoon season now in play that also annually slows production down”, said Clarkson Platou Hellas.

In a separate report, Allied Shipbroking said that “a complete reversal of market conditions has started to take shape in the ship recycling market, with interest amongst breakers starting to rebound considerably as of late, even though offered prices are still well below the levels we were seeing before the pandemic outbreak. The limited activity noted last week in Bangladesh seems to be just temporary, as a fresh series of enquiries, as well as actual transactions took place during the past few days. The effect from the annual budget determination being announced earlier in the month was received as a very strong positive sign in the market. Meanwhile, appetite from Pakistani breakers has returned firm to the market as well, after the reduction of income tax and customs duties for importing of ships. After a prolong period of inactivity, local breakers have started to compete heavily in the market, a fact that is expected to follow through in the coming weeks. In contrast to Bangladesh and Pakistan, things seem to have slacked in India, after a severe drop in local steel prices and the further deprecation of the Indian Rupee against the US dollar. As a result, most sellers of demolition candidates have shifted their interest towards the rest of the Indian Sub-Continent, where they can find much more attractive offers”, said Allied.

Meanwhile, in a separate report this week, GMS, the world’s leading cash buyer of ships said that “India’s plight deteriorated even further this week, with all vessels now being greeted with offers well below USD 300/LDT (for the first time since 2015). As such, many owners HKC green vessels to sell have decided to temporize their sales or withdraw their units altogether, rather than sell for such risible rates. In the meantime, all other vessels are diverted to the far more bullish Bangladeshi and Pakistani markets. Indeed, recently passed budgets in both Pakistan and Bangladesh turned out to be favorable to both markets, with no changes announced in Bangladesh and some economically viable reductions in income taxes and customs duties in Pakistan, resulting in some positive sentiments and renewed buying interest. As such, vessels previously considered and/or sold for the favorably positioned Indian market have since been swiftly diverted, either to Bangladesh or Pakistan, by various Ship Owners and Cash Buyers. Just when most had considered the worst of the recent decline to be over, it has been an alarming decline in prices and sentiment in India, with levels having settled in and around USD 325/Ton on containers – down by about 100/LDT since the pre-Covid peak. A recent surge in the supply of vessels (particularly HKC green units in the container and PCTC segments) has started to alarm Alang Recyclers and as a result, many End Users have either booked themselves with tonnage, or are offering increasingly declining numbers on the multiple of vessels on offer. At worse, they are abstaining from the buying altogether, choosing to wait and watch market developments”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide