Ship Recycling Predicted to Remain Firm During the Second Half of 2021
The ship recycling market has witnessed a slight price correction during the past week, but it’s still predicted to remain firm during the second part of the year. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “with a slight correction from Bangladesh and Pakistan this week, activity across the board seemed to slow once again after the recent flurry of late Summer sales. The momentum that was gained appeared to lose its grasp this week as there was some talk that several owners who were looking to sell their units decided to temporise for the time being. The Indian recyclers may now be in a position to step in as levels return to an area where the Alang recyclers can once again compete for the conventional tonnage, not just those units that require HKC recycling. Any available unit will no doubt arrive from the beleaguered tanker sector where any recovery hangs in the balance after Coronavirus flare ups in China disrupt its economic recovery and ultimately affecting the demand for Oil. If the recovery is slowed, then the promise of wet units on a large scale may finally arrive and appease the appetite for some of the Indian sub continental breakers. But for the moment, whilst supply remains limited, any slight negative correction should recover soon keeping recycling prices at the current 10- year high, allowing Owners to continue to reap the benefits”, Clarkson Platou Hellas concluded.
Meanwhile, in a separate note this week, GMS (www.gmsinc.net), the world’s leading cash buyer of ships said that “a noticeable degree of concern remains evident in the sub-continent ship recycling markets, as both Bangladesh and (especially) India witnessed unexpected declines in steel plate prices over the week. Even the Turkish market recorded a cooling of its own, with sentiments there reportedly starting to simmer off. Bangladesh saw steel prices cool off and jump back up by about USD 20/LDT over the last couple of weeks and a healthy number of Chattogram Buyers have subsequently decided to wait-and-watch market developments before offering firm on any fresh units.
Even in India – where the situation is worse and where plate prices have fallen even more than Bangladesh, Alang Buyers are also re-evaluating their offers and as such, we have seen several Cash Buyers reportedly rolling back (and in some cases, even withdrawing) their offers on certain India-only units, where levels escalated well beyond comfort levels”.
According to GMS, “despite this, many in the industry are expecting the recycling markets to remain firm for the second half of the year, given that China has announced it will no longer be exporting steel, thereby no undercutting of local inventories and billet prices can be expected at the various recycling destinations. Overall, most are not expecting any upcoming decline (collapse?) to be as bad as that of 2008 or even 2015, when prices tumbled at an alarming rate – largely in response to black swan events i.e. the financial crisis of 2008 and the aggressive dumping of Chinese steel in 2015. Barring another major disaster and / or black swan event, there seems to be a small chance of a similar decline this time, as much of the disruption caused by Covid-19 seems to have been factored in and many consider the worst to be over as the global vaccine (and now booster shot) roll out continues. Meanwhile, the Delta variant continues to cause concern across the globe, but as vaccination rates continue at pace and certain countries continue to gradually open (the U.K., Israel, U.S.A., etc.), a certain level of optimism continues to linger in the global markets”, GMS concluded.
Source : Nikos Roussanoglou, Hellenic Shipping News Worldwide