The ship recycling market is going through some changes, with more offers being made to ship owners recently. However, some shipyards are still waiting for more ships, especially container ships, to become available for recycling. According to a report from shipbroker Clarkson Platou Hellas, there has been an increase in offers from buyers for available ships this week, despite some drops in local steel prices in India. Recyclers are eager to fill their yards with any available ships, as there is currently a shortage of ships, causing frustration among domestic recyclers who have empty yards. Some recyclers are holding back, believing that a large number of container ships will soon be available for recycling. However, analysts suggest that it may take some time, possibly even until next year, for this change to happen.
The Ship Recycling Industries Association of India (SRIA) recently approved a resolution stating that ship recyclers should not accept new terms in Memoranda of Agreement (MOA) that could lead to large claims by sellers for accidents, defamation, and other issues during the recycling process. SRIA plans to introduce its own standard contract terms for its members to use, aiming to minimize the risks for domestic recyclers. Meanwhile, Bangladesh is not actively purchasing ships at the moment, and Pakistan, which had shown increased activity in recent weeks, may slow down its purchasing as many recyclers with Letter of Credit facilities already have ships in hand and are waiting due to limited availability of U.S. Dollars in the country.
In a separate statement, GMS, a prominent ship buyer, noted that buyers in both the Indian and Pakistani markets continue to be optimistic, securing high-priced sales in the dry bulk and container sectors. Some recent container ship sales have drawn attention, especially as prices approach or exceed USD 600 per Light Displacement Ton (LDT), making owners of older ships consider their options. India has been a driving force behind recent activity, with steel plate prices rising by about USD 13 per LDT towards the end of the week. Additionally, following a successful G20 summit and a 2% increase in international steel rates, the overall outlook for the Ship Recycling sector in India remains positive.
Pakistan is also seeing decent levels of activity in the dry bulk sector, with Letter of Credit approvals gaining traction again. Bangladesh, on the other hand, is not active in ship purchasing, with low prices and difficulties in obtaining L/C and bank approvals. While some well-priced Chinese-owned vessels have been recycled in recent months, it’s unlikely that further deals will be done below USD 500 per LDT as competing markets see rising prices. Finally, the ship recycling market in Turkey has been stagnant for months due to negative economic factors, with virtually no activity reported.
In summary, there is a decent supply of ships heading to sub-continent markets for recycling in the fourth quarter of the year, particularly older handy/Panamax-sized dry bulk units and feeder containers. This suggests a potentially busy end to the year for the ship recycling industry.