Ship recycling market remain subdued.
As the Diwali holidays take center stage in the sub-continent markets, the maritime industry enters the final months of 2023 with a precarious balance, according to cash buyer GMS. Despite some impressive sales reported in India, overall sentiments and pricing remain subdued.
Moving to the Eastern end, the lead-up to the Bangladeshi elections in mid-January 2024 paints a tumultuous picture. Disruptions, protests, and strikes have besieged the country, making it increasingly challenging to secure lines of credit and complete deliveries into Chattogram. The ongoing unrest adds a layer of uncertainty to the market.
In Pakistan, a renewed interest in buying is emerging as the local currency experiences depreciation once again. The rising cost of vessels is putting pressure on local steel plate prices, prompting local recyclers to consider firming prices to sustain their businesses. This optimism among local recyclers may lead to potential sales at viable levels in the near future, particularly in 2024.
Meanwhile, the Turkish market is experiencing positive developments, with both local and import steel prices showing improvement. Price indications are even suggesting a firming of about US$ 10/MT, as reported by GMS.
On a global scale, steel prices, including those in Turkey and notably China, have been on the rise in recent weeks. There is a lingering hope that these improvements will extend to other recycling markets in the weeks following the conclusion of the Diwali holidays.
Despite the uncertainty, some cash buyers are taking risks by investing in vessels with forward delivery, while prompt vessels face comparative discounts to those with longer or forward laycan.
In the recycling lanes, vintage container ships and dry bulk vessels continue to dominate. However, the anticipated volumes are yet to materialize, disappointing many in the industry. Charter rates and second-hand values have not declined enough to compel shipowners to recycle their units.
In summary, the sub-continent markets, particularly in India and Bangladesh, are facing challenges due to geopolitical and economic factors. While some optimism exists in Pakistan and Turkey, the global steel market’s positive trends are yet to fully impact the recycling industry. The fate of vintage container ships and dry bulk vessels remains uncertain as market conditions continue to evolve. As the industry navigates through the final months of 2023, stakeholders are closely watching for signs of a more robust and sustainable recovery in the recycling sector.