Ship Recycling : Indian Market is unhealthy : Best Oasis

World’s leading cash buyers of ships for recycling BEST OASIS in their weekly ship recycling report opined that, Indian market is unhealthy and still in declining mode.

In the evaluation of the ship recycling sector this week, the Indian market continued to decline, and there appears to be no demand for either the vessels or the scrap; the future of this recycling destination is still largely uncertain. The market for Bangladesh continues to be modest despite buyers presenting higher price offers. This price hike is attributed to their efforts to obtain LC, their inability to procure vessels locally, and the refusal of cash buyers to sell vessels at lower prices. Pakistan appears to be adopting a cautious stance given the upcoming elections and their potential impact on the nation’s economic stability. Turkey exhibited a degree of stability, with minimal variation in imports. 

As a result of escalating tensions in the Red Sea and reports of an increasing number of vessels deviating via COGH (Cape of Good Hope), the majority of suppliers in the region are experiencing significantly increased demand, which is causing a severe shortage of available bunker and fully reserved barge schedules, mandating longer lead times than usual. Although there are already concerns increasing in Singapore, it is anticipated that this trend will spread to all other locations as additional vessels continue to refuel in contemplation of the longer voyage in comparison to the Suez route. 

The Red Sea waterway, which is linked to the Suez Canal, functions as a crucial trading route and oversees a substantial share of global commerce, including the exportation of oil. Significantly, it constitutes 10% to 15% of the total global commerce and encompasses 30% of the volumes of container transportation on a global scale. The ongoing conflict is having a noticeable effect on the global economy as an approximate reduction of 1.3% in worldwide trade has been estimated for November and December. Furthermore, in its semiannual report, the World Bank issued a warning that disruptions to critical maritime routes are straining supply networks and heightening the risk of inflationary constraints.

INDIA

The market saw a further decline and remains uncertain about its potential for rebound.

As indicated in the previous report, the forthcoming course at this destination continues to be puzzling. The central bank has projected that India’s economic growth is expected to reach around 7% in the next fiscal year, with inflation averaging around 4.5%.   

There is a significant potential for a shift in India-US trade. India has recently established an in-house system to monitor and regulate the export of steel and aluminum products to the United States, resulting in reduced duties. According to recent reports, the Department of Commerce has finalized the terms of reference for the Joint Monitoring Mechanism (JMM) and it aims to streamline the process of exporting certain steel and aluminum products to the United States, without imposing any extra duties. The United States has agreed with the provisions that have been proposed. 

Beaching Dates 

23 January to 30 January 2024 

08 February to 15 February 2024 

23 February to 27 February 2024 

BANGLADESH

The market is not favorable, but prices remain elevated due to the scarcity of tonnage and the beginning of the new year.

The current increase in vessel prices can be attributed to buyers attempting to utilize the LC facilities. Buyers are currently willing to pay higher prices due to the scarcity of vessels in the local market and the reluctance of cash buyers to sell at lower costs. The market seems unfavorable, however, buyers are making efforts to buy.  

The Bangladesh Bank has adjusted Bangladesh’s economic growth target for the fiscal year 2023-24, lowering it to 6.5 percent from the previous projection of 7.5 percent. The revision of the growth target was made in response to the IMF’s downward revision of Bangladesh’s economic growth forecast from 6.5 percent to 6 percent. 

Beaching Dates 

28 January to 30 January 2024

11 February to 14 February 2024

26 February to 29 February 2024 

PAKISTAN

The market is currently experiencing low activity due to a decline in demand. 

Market activity is subdued since demand is significantly reduced in anticipation of the upcoming elections. Recyclers are concerned about potential post-election instability and are taking precautions to safeguard themselves against it. The foreign exchange market is gradually improving, and the value of the PKR is currently stable. 

A surge in geopolitical tension between Pakistan and Iran had a significant impact on Pakistan’s bonds and stocks and raised concerns about the presently fragile state of the country’s economy. 

Beaching Dates 

Throughout the month

TURKIYE

The market continues to exhibit stability, yet there have been some fluctuations in the imports. 

The market remains stable with a slight decline of 3 USD in imports, while the local market remains unchanged. 

The central bank is expected to conclude its rate hikes this month, reaching a projected increase of 45%, just before the upcoming municipal elections in March. Consequently, it anticipates a decline in inflation to 36% this year, followed by further reductions to 14% in 2025, and eventually reaching single digits by 2026. 

The Turkish lira has further depreciated, reaching a new low of 30 per USD; by the end of the year, it is anticipated to have increased to 40 per USD. 

Beaching Dates Throughout the month