GMS, the world’s leading cash buyer of ships, has reported a comparatively muted week in terms of sentiments, sales, and activity in the ship recycling market. Financial constraints in Bangladesh have been hampering the efforts of Chattogram Buyers in keeping domestic yards busy, especially as new construction and infrastructure projects are expected to be initiated in the country. The government’s focus on essential items for expenditure, such as food, fuel, and fertilizers, has led to difficulties in obtaining L/C (Letter of Credit) approvals on incoming vessels. Consequently, it is predicted to be a quieter summer for the ship recycling market.
Despite the challenges, there is still demand for tonnage from recyclers, with cash buyers circulating purchase inquiries, which is considered rare in the industry. Shipowners contemplating the sale of their vessels for recycling are advised to take advantage of the firm numbers currently on the table while tonnage is in short supply. Analysts predict that the latter part of the year will see a larger volume of tonnage arriving at recycling shores. Additionally, the aging fleet and the presence of tanker units in the dark fleet pose interesting prospects for sales in the future.
India remains the most stable market for ship recycling, although Bangladeshi counterparts are outbidding them. However, Bangladeshi recyclers continue to face L/C implications, and most sales are being concluded on a case-by-case basis. The ship recycling industry in Pakistan remains dormant due to financial and political turmoil, although there have been a few inquiries from this destination.
Clarkson Platou Hellas, a shipbroker, suggests waiting for the supply of units to escalate before purchasing at lower rates. Allied Shipbroking, another shipbroker, notes that weakening fundamentals in Bangladesh are applying downward pressure on breaker’s prices, but they still remain the most attractive option. The approval of the Hong Kong Convention (HKC) by Bangladesh has spurred action from Liberia, who are expected to ratify the convention, potentially leading to revisiting the content of the text and further tightening regulations.
It’s important to note that the information provided is based on the statements of GMS and the shipbrokers mentioned, and it reflects the conditions and dynamics in the ship recycling market at the time the statements were made. Market conditions can change rapidly, so it’s advisable to seek the most up-to-date information from reliable sources if you require specific and current insights on the ship recycling industry.