Ship Recycing: Plates Plunge

While activity seemed as though it had been steadily increasing going into the final quarter of the year, the last couple of weeks have sent mixed signals as to whether the fourth quarter will actually be better for the ship recycling sector as many have been anticipating.

A couple of weeks ago, we saw currencies plummet in Pakistan and Bangladesh to the point, a wait-and-watch attitude encompassed both markets – at least until the first sale to a local recycler establishes the new baseline for a type of unit in that market.

This week, it was local steel plate prices across the sub-continent board that declined to varying degrees, subsequently adding even more pressure on a potential ship-recycling resurgence for Q4.

Mixed in with the fact that there are still, very few candidates that have headed to sub-continent shores over the previous two quarters and sub continent markets have, as a result, witnessed a gradual buildup of demand over this time, especially as plots and port reports empty out to eerily quiet levels, especially in Pakistan, which has not seen a fresh arrival at the waterfront for nearly to months now.

We have not seen recycling markets as dormant for many a year, as all freight sectors push on and ship owners are opting to continue trading, rather than getting rid of their older assets.

As dry bulk and container rates continue to cool off, it may be that we see a few more vessels from these sectors before the year is out. Tankers too have seen a remarkable turnaround of late, with VLCCs finally seeing some positivity after years in the doldrums. The main supply of tankers that we have seen come for recycling over the last few years is therefore likely to dry up for the foreseeable future.

Prices remain stationed at or just below the US $600/LDT threshold, although there are still difficulties in getting vessels sold / delivered into Pakistan (due to a constantly depreciating currency) and in Bangladesh, due to tough government imposed L/C restrictions that are still in place there for any large US$ value transactions.

For week 38 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 / LDT*	580 / LDT*	590 / 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

*Small LDT