Ship Recycling Prices Plunge 25%

Friday, June 22, 2012

Demolition Prices for elderly ships have fallen by a quarter in 2012 to date, and owners are encouraged to dispose of recycling candidates sooner rather than later, says Mark Williams of Braemar Seascope.

Addressing the 7th Annual Ship Recycling Conference in London on 19th June, the Braemar Seascope Research Director told delegates that deflating international steel prices were likely to translate into lower offers for recycling tonnage in the coming quarters.
Meanwhile, rapid reductions in the value of the Indian, Pakistani and Bangladeshi currencies against the US dollar are causing difficulties for cash buyers and end users struggling to pass on cost increases to their own customers, despite long-term strong recycled steel demand growth prospects in the sub-Continent.
Forex risk for recyclers has been compounded by intermittent limited availability of credit. Buyers’ banks have been challenged by “sight LC’s” – letters of credit that must be honored on sight, which can be hampered by a shortage of hard currency. 
Meanwhile cash buyers paying hard currency for recycling candidates are bearing the forex and credit risk of selling in local currency to the recycling facilities.
Falling demolition price assessments, as published by the Baltic Exchange, are likely to influence second hand vessel prices, says Williams: “For example, it could be argued that over-age oil tankers are now priced off scrap, which will lead to increased numbers of younger ships being sucked into the recycling markets.”
Williams also presented the hypothesis that spikes in scrapping are driven not only by low freight rates, or high scrapping prices, but by credit crunches. “Credit crunches coincided with peaks in recycling in 1986 (the year the Biffex bottomed out at 550 points and banks had stopped supporting technically bankrupt owners following the savings and loan crisis), 1998 (the Asian financial crisis which led to an Asia‐wide credit crunch and high scrapping despite relatively low values per LDT) and 2008/09 (the global financial crisis)” which is clearly depicted on the chart.

 

Maritime Reporter July 2015 Digital Edition
FREE Maritime Reporter Subscription
Latest Maritime News    rss feeds

Shipbuilding

MHI: Notice of Absorption-Type Split Agreements

MHI gives Notice Regarding Conclusion of Absorption-type Split Agreements Relating to Transfer of Ship Construction and Hull Block Manufacture Businesses to Two

Fratelli Neri Orders Damen Tug

One of the largest Italian tug owners, Fratelli Neri S.p.A, ordered its first Damen tug, an ASD 3212, on 21 July 2015.   The vessel will be the first ASD tug

Thai Navy Lobbies for More Submarines

The Royal Thai Navy claims it urgently needs more submarines to compete with other Asian countries.   The assistant commander made the claim aimed at persuading

Ship Sales

Fratelli Neri Orders Damen Tug

One of the largest Italian tug owners, Fratelli Neri S.p.A, ordered its first Damen tug, an ASD 3212, on 21 July 2015.   The vessel will be the first ASD tug

China Shipping Orders Eight 13500 TEU Box Ships

China Shipping Container Lines has placed orders for eight 13,500 twenty-foot-equivalent container ships at Shanghai Jiangnan Changxing Shipbuilding, continuing

Pacific Basin Returns to The Black

Pacific Basin Shipping cut its half-year underlying losses by 32 per cent to US$14.6 million from a year ago, thanks to stringent cost-cutting efforts that helped

Finance

Ross is Fleet Manager, Heidmar

Heidmar announced the promotion of Duncan Ross to Fleet Manager. Duncan joined Heidmar’s London office in 2012 as vessel manager.  Prior to joining Heidmar,

Diana Shipping Nets 2Q Loss

Diana Shipping Inc. today reported a net loss of $14.1 million and net loss attributed to common stockholders of $15.5 million for the second quarter of 2015, compared to net loss of $5.

U.S. Drillers Add Rigs Despite Crude Collapse

U.S. energy firms added 5 oil rigs this week after putting 21 rigs into service last week, the most in over a year, despite a collapse in U.S. crude prices from recent highs in June,

 
 
Maritime Standards Offshore Oil Pipelines Port Authority Salvage Ship Electronics Ship Repair Ship Simulators Shipbuilding / Vessel Construction Sonar
rss | archive | history | articles | privacy | contributors | top maritime news | about us | copyright | maritime magazines
maritime security news | shipbuilding news | maritime industry | shipping news | maritime reporting | workboats news | ship design | maritime business

Time taken: 0.1510 sec (7 req/sec)