14 December 2017

Recycling - a speculative surge

Recycling sales and speculation ramped up another notch last week as several extraordinarily high-priced deals were concluded, GMS said in its weekly report.

These deals were concluded mainly in the bullish Pakistani market.

Meanwhile, on the local markets front, on the back of the repeat tragedy on board the ‘FSU ACES’ a few weeks ago, the Pakistani market remains (seemingly indefinitely) closed for tankers.

Moreover, the recent firming dry and container freight rates have in turn led to an dearth of potential units, compared to years gone by, from these sectors.

Notwithstanding, fundamentals remain firm overall and we may well experience some buoyancy across all sub-continent markets as the year-end approaches – a time that has traditionally been an active period in the ship recycling industry as shipowners look to sell off their ageing assets in order to balance their books, GMS said

On the pricing front, there certainly seems to be a disconnect between the levels that cash buyers have concluded, when compared to the reality on the ground, ie levels offered by local recyclers.

Only time will tell whether such offerings will improve to the extent that profits are realised on some of these recently exaggerated sales.

It is a shame that the Chinese market remains essentially closed and the Turkish market remains relatively subdued, as local steel prices, currencies and scrap fundamentals remain steady - especially in the sub-continent markets, GMS concluded.

Meanwhile, India has drafted legislation to implement the ‘Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships’, Shipping Minister Nitin Gadkari said this week. “To make the ship recycling industry safe for its workers and the environment, draft legislation to implement the Hong Kong Convention (HKC) is now undergoing pre-legislative consultations; I am confident that we will ratify this convention in the not-too-distant future.”

He was addressing delegates at the IMO Assembly in London on Tuesday.

The Convention is yet to enter into force as it has not been ratified by 15 states, representing 40% of the world merchant shipping by gross tonnage. Only six countries – Norway, Congo, France, Belgium, Panama and Denmark — have ratified it, thus far.

India is currently upgrading the world’s largest stretch of shipbreaking beaches on Alang-Sosiya in Gujarat’s Bhavnagar district through a $76 mill soft loan from the Japan International Cooperation Agency.

Since 2015, recycling yards in Alang-Sosiya have voluntarily started upgrading their facilities to conform to the HKC. Some 55 of the 120 working yards have won HKC compliance certificates from class societies. Fifteen other yards are being audited for certification.

As for vessels sold for recycling, brokers reported that the 1996-built VLCC ‘OS Arcadia’ had been committed to Bangladesh breakers for around $419 per ldt.

The 1993-built Suezmax ‘Green Trader’ was reported sold to unknown interests for $417 per ldt on the basis of ‘as is’ Singapore, while the two 1999-built Aframaxes - ‘Astute’ and ‘Tina’ - were reported sold to Indian sub-continent buyers at an undisclosed level.

Finally, Indian recyclers were said to have taken the 1993-built Handysize ‘Harsha Prem’ for an undisclosed price.

Source: tanker operator. 01 December 2017

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