The ship recycling market has seen increased interest from India in the past week. According to shipbroker Clarkson Platou Hellas, India is taking the lead in making offers for ship recycling. This interest is partly due to a boost from the local steel industry, which encourages recyclers to offer better rates. However, there’s still a wide range of prices being offered, making it challenging to determine the true value of ships in this market.
For example, clients of MSC sold a private container for green recycling in India at a rate of around USD 547 per light displacement ton (ldt), while clients of Sinokor concluded another container vessel deal at approximately USD 612 per ldt. Whether these high prices are justified remains to be seen. Dry bulk and tanker rates are still hovering in the low to mid-500s, indicating that recyclers prefer container units.
Ship sold for recycling and priced in Bangladesh’s local currency
Meanwhile, buyers in Bangladesh and Pakistan are struggling with restrictions on domestic letters of credit, leading to delays for units arriving for recycling in Gadani, Pakistan.
GMS, a leading cash buyer of ships, also noted the strong activity in the sub-continent ship recycling markets, with a focus on India. Some exceptionally high container sales have been reported in recent weeks, with prices even surpassing USD 600 per ton for container units in Alang, India. This suggests that sentiments and demand in Alang are recovering.
Pakistan is not far behind India, with select dry bulk sales to Gadani Recyclers, who now have L/C approvals in place. However, Bangladesh’s domestic recyclers continue to face challenges.
In Turkey, there’s some positive movement with increased demand and optimism returning to the market.
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GMS cautioned that cash buyers are speculating on units, which could lead to loss-making deals if they acquire vessels at unrealistic levels. This fervor to acquire vessels at high prices could result in challenges if the market turns unfavorable. It remains to be seen whether these recent purchases will turn out well, especially for delivered units. The ship recycling market is unpredictable, and caution is advised to avoid repeating the losses seen in the recent past.