The ship recycling market is currently facing some challenges. According to a recent report by shipbroker Clarkson Platou Hellas, while India is celebrating its successful ‘Chandrayaan-3’ mission to the Moon and making history by being the first nation to land at the Moon’s South Pole, there is not much to celebrate in the Alang recycling yards. The local market sentiment there remains cautious. This caution is due to the fact that there isn’t a strong demand for the finished products from the local rolling mills, which is causing prices to be weaker.
This situation is a contrast to the recent small step forward observed in Pakistan’s ship recycling efforts, although it’s not a significant leap. Some recyclers are reentering the market, committing a few vessels to be recycled in Pakistan. However, there are concerns about the delivery process and the time it will take for the necessary financial arrangements to be made, like opening Letters of Credit upon arrival at the official anchorage. The coming weeks will reveal whether these financial issues cause significant delays. Despite these challenges, there’s a glimmer of optimism, with hopes that competition with other recycling destinations will pick up once more tonnage starts flowing to the Gadani yard in Pakistan.
Separately, Allied, another entity in the ship recycling industry, noted that despite a long list of vessels, the market remains somewhat sluggish in India and Bangladesh. This is largely due to weak local steel prices. The attached sales data demonstrates the ongoing trend of Bangladesh yards acquiring smaller vessels. It’s important to note that many of these sales have only recently come to light as the vessels arrive at the yards. This list serves as an indication of recent activity. In the cases of the ‘Jitra Bhum’ and ‘Kama Bhum’, spare parts have helped support the price despite the sales being on an ‘as is’ basis.
On a more positive note, there’s a notable sale of the ‘Yong Ning’ and ‘Gloria 1’, marking a strong return to the market for Pakistani shipbreakers. These sales represent two of the highest LDT (Light Displacement Tonnage) sales in recent weeks. Yards that have been hungry for tonnage are likely to seek more deals now that the initial obstacles have been overcome and the first few Letters of Credit have been arranged. The competitive prices being offered should also encourage vessel owners looking to sell their ships for recycling.