Activity in the ships’ demolition market
has been slowing down over the course of the past few days. In its latest
weekly report, shipbroker Clarkson Platou Hellas said that “as the Eid holidays
finally came to an end, there appears to have been a slowdown in activity last
week due to a lesser supply of tonnage and also, a weakening of the respective
currencies in the Indian subcontinent destinations. In Pakistan, the recyclers
are starting to factor in the cost of the sales tax duty, coming into effect
this week, for any new available tonnage and thus, this will restrict any
potential improvement in rates for the foreseeable future”.
According to Clarkson, “Bangladesh and
India have both suffered a weakening of their currencies against the U.S.
Dollar this week which may also stem some positive offering from the
waterfront. But all in all, we are still witnessing a somewhat stable and
relatively calm market. Meantime, a fresh argument has reportedly broken out
over the European ship recycling regulation, due to come into force at the end
of this year. European Ship Owners stress, rightly, that there is insufficient
capacity on the European list of approved yards and strongly believe some of
the Indian yards are brought into the equation. The usual counter arguments
from the lobbyists is that this is not true and there is sufficient capacity”.
The shipbroker added that “the European
Ship Recycling regulation was established in 2013 calling for a list of
approved facilities to be drawn up and for ships under European flags to then
only be recycled at one of these approved facilities. The regulation also calls
for all vessels calling at E.U. ports to have an approved and valid Inventory
of Hazardous Materials (IHM) kept on board the vessel. This latest disagreement
is because the current list of approved recycling yards consists of only 21
facilities, simply not sufficient enough for the demands of recycling vessels
during the year (especially now that China has announced no further importing
of international flagged vessels for recycling). All the facilities on the list
are in Europe and no Indian subcontinent yards are being considered due to the
word ‘beaching’. Yet, the improvements made to the Indian yards in particular,
have been immense over recent years and on par with their counterparts in
Europe. Unfortunately, these environmental organisations will not accept a
vessel having to be beached despite major improvements towards labour and the
environment in the recycling destination of India and the PHP yard in
Bangladesh. The E.U. commission are working towards incorporating some of the
better yards in India on their list with certain inspections/visits having been
arranged, but it does not help their plight with consistent negative reporting
from the various lobby groups. The E.U. are being urged to rapidly include
non-European facilities onto the list, in particular, the Indian recycling
yards that have been approved under the H.K. Convention. It is hoped that
common sense will prevail and those yards that have upgraded their facilities
will be rewarded with E.U. approvals. Interesting times indeed lie ahead in
this respect so we at the moment, can only ‘watch this space!’, Clarkson Platou
Hellas concluded.
Meanwhile, in a separate note, GMS, the
world’s leading cash buyer of ships said that “with the summer / monsoon season
fully under way across the Indian sub-continent, prices and demand have started
to decline across the board for various reasons. While on the one hand, the
seasonal labor returning to their home towns due to the constant rains
affecting the cutting processes and hampering overall production is the
traditional reason for the cooling markets, on the other hand, declining local
steel plate prices, currencies and missing cutting permissions have driven
demand for tonnage, down this week. As such, most end Buyers are preferring to
temper their purchases as levels and interest slips in anticipation of a
potential fourth quarter rally, which has historically been a busy period in
the ship recycling industry and this year is expected to be no different, given
that owners (particularly in the tanker sector) continue to struggle with dire
charter rates and (wet) units seem to fall out of the sky. A sustained level of
scrapping of tanker and offshore fleets will be needed just to aid levels and
bring a certain equilibrium back to these sectors in the years ahead – just as
dry and container rates have finally bounced back, following a period of
sustained recycling in the years gone by. Supply is expected to persist going
forward and sales will continue to take place, often to speculative Cash Buyers
who do not have end Buyers lined up but prefer to utilize their available
finance streams. As such, as long as the inflow remains at a steady trickle
rather than a deluge, prices should remain relatively stable as the markets
sail through the monsoons”, GMS commented in its weekly analysis.
Source: Hellenic shipping news. 06 July 2018
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