Malaise Takes Hold of Ship Recycling Markets

The international ship recycling malaise that has gripped the markets over these recent / summer months continues for another week, with minimal-to-no activity and barely any firm interest from recyclers, while fundamentals remain ever so fragile.

Steel plate prices have once again started to display their share of volatility in India, in addition to the currency that showed signs of firming towards Rs. 79.20 against the U.S. dollar, whilst weakening back towards Rs. 80 mark before the week ended.

The Pakistani and Bangladeshi economies continue to teeter precariously on the edge with currencies and plate prices continuing to display some grasping signs of stability (against the U.S. dollar) at their weakest levels ever. Although there seems no danger of a repeat of the Sri Lanka collapse that most pessimistic Recyclers in the sub-continent have been fearing.

Finally, the Turkish market continues to plummet and languish in the doldrums, with falling plate prices and vessel prices that are on their respective precipices of another drop away from oblivion.

Meanwhile, dry bulk charter rates in the larger segments have started to cool off of late, but many are expecting (and hoping) for a rebound come fourth quarter of the year. As such, there is not too much of an expectation on an increase in the number of recycling candidates just yet. Even in the most beleaguered sector of the shipping industry – VLCCs – has seen charter earnings and rates / interest rise once again, and this is further depriving ship-recycling markets of a supply of tonnage.

Overall, in the industry, L/Cs over USD 3 million (rumored to be further reduced to USD 2 Million) are struggling to get approvals from the Central State Bank in Bangladesh, so this is ruling out the import of most larger LDT tonnage into the country. It will take some time for the economic crisis and foreign currency woes to settle down there, before activity can return to some form of normality.

For week 33 of 2022, GMS demo rankings / pricing for the week are as below.

Demo Rank	Location	Sentiment	Dry Bulk USD / LDT	Tankers USD / LDT	Containers USD / LDT
1	Bangladesh	Weak	570 / (small) LDT	580 / (small) LDT	590 / (small) LDT
2	India	Weak	560 / LDT	570 / LDT	580 / LDT
3	Pakistan	Weak	550 / LDT	560 / LDT	570 / LDT
4	Turkey	Weak	240 / LDT	250 / LDT	260 / LDT