Steel Plate Prices Lagging in Indian Sub-Continent Ship Recycling
The ship recycling market has been relatively quiet lately, with activity slowing down during the Diwali festivities. According to a recent report from shipbroker Clarkson Platou Hellas, the recycling market remained inactive as Diwali celebrations were in full swing. Despite this, there is a positive shift in sentiment from recycling yards due to a continued shortage of tonnage, leading to improved indications. Indian recyclers are setting the pace in pricing, but the real test lies in how domestic steel markets will fare post-Diwali. The shipbroker is keen to observe the market sentiment after the festive season, especially in Bangladesh and Pakistan, where ongoing issues with opening Letters of Credit are hindering activity, and financial difficulties are expected to persist into the New Year.
In a separate note, Allied reported that the recycling market continued at a slightly quieter pace, partly due to Diwali celebrations. Despite the subdued activity, a significant sale of the ‘SAMC Eddie,’ weighing 24,181 LDT, with delivery in January, emerged. The sale price, close to the current market rate, suggests confidence in prices over the next two months, considering the “as is” nature of the sale. This confidence is supported by positive movements in scrap and steel prices across the Indian Sub-continent, benefiting breakers in India, even if domestic price changes have not all been favorable.
However, the Bangladeshi and Pakistani markets face challenges with unresolved issues in opening Letters of Credit, and financial difficulties are expected to continue. An agreement reached between IMF staff and Pakistani authorities on November 15th, providing access to around $700 million pending IMF executive board approval, may ease the opening of LCs for buyers. Nevertheless, offers need to catch up with competitors before vessels start arriving at yards in Gadani.
GMS, the world’s leading cash buyer of ships, noted in its weekly report that Alang Recyclers in India are slowly returning to work after the conclusion of Diwali celebrations. Despite this, declining plate prices, stagnant sentiments, and local offerings characterize the ship recycling markets across the Indian sub-continent. The ongoing dilemma persists as steel plate prices have not seen the expected increase, and fluctuating currencies pose ongoing concerns for domestic markets.
Turkey, on the other hand, is experiencing minor improvements in steel fundamentals and vessel prices. The ship recycling markets globally are witnessing a slow week of sales activity, with limited offerings on tonnage and few market/private deals being concluded. This trend is pushing the conclusion timeline for present-day sales candidates further down, as industry players anticipate a firmer end to the year and a promising start to 2024.
Surprisingly, Bulk Carriers and Containers are trading at a fraction above their current operating expenses levels. This is noteworthy, considering that recycling prices are at historically firmer levels today. The present-day slim earnings on vessel trades may not be financially troublesome for vessel owners who have experienced success and accumulated finances across various sectors during the Covid-19 pandemic. Bulk carriers and containers are trading surprisingly slightly above their current operating expenses, even though recycling prices are historically firm today. This could be attributed to vessel owners not finding the current slim earnings on vessel trades financially troublesome, given their success and accumulated finances across various sectors during the Covid-19 pandemic. Additionally, the severe lack of U.S. Dollar reserves in ship-recycling destinations and government mandates restricting the allocation of foreign currency reserves have made domestic banks reluctant to approve fresh Letters of Credit on recycling vessels in Pakistan and Bangladesh.
The lack of U.S. Dollar reserves in affected ship-recycling destinations and government mandates restricting the allocation of foreign currency reserves on essential items have led domestic banks to be increasingly unwilling to sanction fresh Letters of Credit on recycling vessels in Pakistan and Bangladesh. This has contributed to challenging times across major ship-recycling locations as recyclers bid on tonnage, with the hope of a firmer start to 2024, especially if international steel prices are indicative of future trends, as concluded by GMS.