Ship Breaking Industry Sail Through Diwali Festivals Anticipation: A Week of Positive Trends
The shipbreaking industry has witnessed positive developments in the past week, marked by the Bahri week in Dubai and the anticipation of Diwali holidays. In this overview, we delve into the insights provided by shipbroker Clarkson Platou Hellas, Allied Shipbroking, and GMS, shedding light on the current state of the shipbreaking market and its various dynamics.
Clarkson Platou Hellas Analysis
According to Clarkson Platou Hellas, the recent week has been favorable for shipbreaking, particularly in the Indian subcontinent. While domestic markets in the region have experienced a return of stability, there has not been the usual pre-Diwali surge in prices from India. Despite reports of a few ships entering the market, many are either being withdrawn or delayed as owners find that price levels do not meet their expectations.
MSC, however, continues to gradually introduce aging container units into India, ensuring prompt delivery. Despite this, there is an overall scarcity of tonnage in the market. The report concludes that a quiet period has settled over the market, a trend expected to persist during the upcoming Diwali festivities.
Allied Shipbroking’s Perspective
Adding to the analysis, Allied Shipbroking notes that it has been a robust week for Indian breakers, with five vessels committed for recycling, totaling over 40,000 LDT just ahead of the Diwali celebrations on November 12th. The report highlights the ‘Catherine Bright,’ which achieved a price of $535/Ldt, seemingly above the market rate. This could be attributed to end buyers competing to secure tonnage before the Diwali week, though other factors may also be at play.
Imported steel prices across the Indian subcontinent have risen, potentially leading to higher offers from yards. However, the report mentions that LC (Letter of Credit) remains an obstacle to purchases in Bangladesh and Pakistan. Only one container sale was reported during the week, but the anticipation of vessel disposals is high, especially given the major liners’ Q3 earnings decline and pessimistic statements.
GMS Market Analysis
GMS, the world’s leading cash buyer of ships, provides a comprehensive perspective on the shipbreaking market. The report suggests that markets are delicately poised as Diwali holidays commence in the subcontinent, heading into the final months of 2023. While several sales have been reported in India at impressive levels, overall sentiments and pricing remain subdued.
In Bangladesh, disruptions, protests, and strikes in the lead-up to the January 2024 elections are expected to pose challenges to getting L/Cs open and completing deliveries into Chattogram. Pakistan, experiencing a currency depreciation, is witnessing a resurgence in buying interest as vessels become more expensive. The local steel plate prices are expected to firm up to maintain the viability of local business, providing encouragement for local recyclers to sell their products at workable levels in 2024.
The Turkish market, on the other hand, reports improvements with rising local and import steel prices. Overall, there is hope that the global steel price improvements, including those in Turkey and China, could positively impact other recycling markets in the weeks following the Diwali holidays.
Market Dynamics and Future Outlook
As global steel prices show signs of improvement, the shipbreaking industry is cautiously optimistic about potential positive shifts. The hope is that these improvements will extend to other recycling markets, especially after the conclusion of Diwali holidays.
Despite uncertainties, some cash buyers continue to take risks on vessels with forward deliveries, while prompt vessels face comparative discounts. Vintage containers and dry bulk vessels dominate the recycling lanes, but the expected volumes are yet to materialize, particularly as charter rates and secondhand values remain steady, and ship owners are yet to be compelled to recycle their units.
In summary, the recent developments in the shipbreaking industry paint a nuanced picture. While there are positive indicators in certain regions, challenges persist, and the overall market sentiment remains cautious. The industry will closely watch how global steel price improvements unfold in the coming weeks and whether they will have a cascading effect on shipbreaking dynamics worldwide.