Ship Recycling Prices Continue Downward Trend
Another woeful week of declining sentiments has left all of the major global ship-recycling markets on edge as the industry approaches the summer / monsoon months in the sub-continent. Moreover, it seems doubtful (at present) that any more noteworthy deals will likely be concluded, especially with the industry in such a state of disarray.
Depreciating currencies and plummeting steel plate prices (especially in Pakistan this week alone) have left nearly all of the major recycling markets looking at a near $100/LDT decline in prices since the peaks of over $700/LDT (and nearly $500/MT in Turkey) seen several weeks ago.
As a result, it is unlikely that cash buyers with inventory to sell or ship owners looking at fresh deals should be willing to take this hit, and may prefer to trade their vessels a little further, especially with freight markets now starting to improve.
A lack of supply may see sub-continent recyclers return to the table, and it has been a quieter overall last few months in terms of new candidates, as an improving freight sector and ongoing holidays (including the Holy month of Ramadan) have started to tell.
Notwithstanding, at this stage it is impossible to tell where the bottom of the market may be, as once prices start to cool-off at key recycling locations, they tend to drop like a stone and Owners would be strongly advised against chasing down a market that appears to be hitting new lows with each passing day.
According to GMS, It would be better to monitor market movements instead and wait for some stability / positivity to return before dipping back in at these new levels, wherever they may end – bearing in mind this is a sector that has almost tripled over the previous few years and some form of error correction was always in the books because what goes up eventually comes back down.