.....As Ships Demolition Market Picks Up

Shipowners have been looking to offload more of their older ships over the course of the past couple of weeks, according to the latest reports from shipbrokers. Clarkson Platou Hellas said that “as we now approach the period of Advent, observed in many Christian churches as a time of expectant waiting and preparation for the celebration of the Nativity, we could also use this in relation to the current market conditions as it seems that some strong confidence has returned to the market again and enabled a small flurry of deals to be completed on the back of this renewed optimism. 

This has also led to some opportunist Owners pouncing on these strong rates as they reap the benefits and therefore, the expectation is that additional Sellers may appear in the market during this seasonal time to catch the current positive sentiment emanating from the industry. Whilst the majority of sales have been committed with Pakistan in mind, it also seems that India has finally awoken and is once again proving to be a serious competitor to their neighbouring counterpart. Whether India actually returns as the front runner in this region and swallows up the majority of tonnage remains to be seen but certainly Bangladesh may now lose out on some tonnage that is proposed to the market as their rates fall away from those on offer from India/Pakistan. 

Even current tanker sales look destined to the Indian recycling yards which was unheard of throughout the year”, said the shipbroker.In a separate report, Allied Shipbroking said that “after an extensive period of limited flow of demo candidates in the ship recycling market, where the main breakers remained relatively passive, looking to more so monitor the market from a distance and hunting only high spec opportunities that come to market, things have now changed rapidly, moving things in a completely different direction. Even if things have substantially slowed down during the latter half of this past week, the positive momentum is still apparent and looks to be keeping most on their toes. After the sound appetite noted by India Buyers during the previous week, Bangladesh took seemed to have now taken the lead to push the buying volume to fairly firm levels, despite the gap in offered prices compared to their Pakistani breakers which are still seemingly looking to mainly compete intensely on only the higher profile units that emerge. With China turning to an environmentally friendlier orientation, and the softening of the local currency in Turkey, all eyes are, at this point, firmly focused on the India-Sub Continent region. For the time being, with a fair amount of speculation now forming a significant portion of the ship recycling market, we are likely to continue to see high volatility take place”.

According to the world’s leading cash buyer GMS, “the recently witnessed hot streak from the sub-continent markets continued for yet another week, with a number of incredibly high-priced fixtures bearing testament to an industry that is firmly on the rise. Having seen some perplexing container and Capesize bulker sales in the preceding weeks, of late, the focus seems to have decisively shifted towards tankers. 

This week, the sale of two Polembros controlled units at eye watering levels must certainly have caught the attention of Ship Owners the world over. As this particular sector (i.e. tankers) continues to struggle whilst container and dry bulk freight rates push on, strong scrapping rates to help remove some of the excess from the global trading (wet) fleets may just be what the doctor ordered. In recent years, excellent recycling volumes of Panamax containers and Capesize (and other) bulkers has likely contributed to the far more bullish chartering sectors this year as Ship Owners finally appear to be getting back on their feet once again. This year, it is the offshore and tanker segments, which have endured the most pain as about 13 VLCCs and 25 Aframax tankers have been sold to date – in what has become the most active segment of recycling through 2017. 

Notwithstanding, as new builds continue to hit the water, the ongoing recycling momentum needs to persist in order to balance out the global fleet size. Hopefully, the industry continues to see a few more busy years ahead. To this end, it would certainly bear well to witness a re-opening of the Pakistani market for tankers and there are rumors circulating (once again) after the most recent PSBA meetings that this could (optimistically) become a reality by the second half of December. 2017 as it seems, may still have a few tricks up its sleeve for the ship-recycling sector.