A lack of vintage tonnage on offer, is the reason behind the weakness of the ship recycling market. In its latest weekly analysis, Best Oasis (www.best-oasis.com), one of the leading cash buyer of ships, said that “we observed this week that India’s ship recycling activity is continuing to decline, with the country demonstrating little interest and low demand. Bangladesh continued as it had the week prior, but it still managed to secure a limited number of deals. In the same way that Pakistan reflected the sentiment it had the week before, Turkey also experienced a decline in activity this week. In a nutshell, there have been no favorable advancements observed in the recycling industry this week”.
Best Oasis added that “in contrast to the still-relatively aggressive interest rate cut bets in financial markets, a survey of economists predicts that global growth will remain robust this year and only pick up slightly in 2025. The outlook for growth among the top economies is not consistent, with the US and India expected to be relatively strong, and the eurozone and China, the world’s second-largest economy, to be sluggish. The persistent missile assaults carried out by the Houthi rebels in the Red Sea are continually exerting an influence on diverse sectors of maritime commerce. These impacts surpass liner shipping and involve wet bulk, dry bulk, car carrier, and LNG trades as well. There are already noticeable repercussions on Western economies as a result of the aggression backed by Iran, including escalated costs of liquefied natural gas (LNG) in Europe. It is reasonable to conclude that the global economy is being significantly impacted by the Houthis’ actions in the Red Sea”, the report concluded.
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In a separate report, shipbroker Clarkson Platou Hellas said that “the sluggish market remains with the dearth of tonnage continuing, and the Indian recycling industry particularly in the doldrums with slim demand from the steel mills for ship steel. Some serious question marks are being raised from Alang with many of the rerolling mills closing and very little appetite for the recyclers to procure tonnage at this current time.
Maybe the Indian election in April, will provide some much-needed stimulus to the industry and hopefully kickstart sentiment again! Elsewhere, there is some increased interest from the Pakistani recyclers as the complete opposite to India is being reported. There is strong demand to purchase ships/steel in Karachi and they now look set to be the likely destination for any available candidate that is not requiring green recycling. Rumours suggest the financing restrictions are slowly easing”, the shipbroker concluded.
Meanwhile, Allied Shipbroking added that it was “another successful week for Bangladesh, with several bulk carriers heading towards its ship recycling yards. Strengthening prices have allowed breakers to out compete yards in India and Pakistan while the steel market and currency fundamentals moved in a supportive fashion. The observance of a national holiday in India last week appears to have impacted the activity of shipbreaking yards. As the activity slowed down, scrap prices experienced a further decline, and there was no MSC-owned container vessel to ease the limited supply of tonnage. While no confirmed vessels reached Pakistani yards this week, the picture was a little rosier, following the relaxation of LC constraints by banks has increased demand for yards and the stability of the prices offered by breakers. Potentially, it is only a matter of time before we witness more active shipbreaking in Pakistani yards”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide