Scrapping of older vessels is
still the best bet that ship owners can make, in order to improve their newer
vessels' fortunes, amid an oversupply of tonnage, which has plagued most
shipping markets over the past couple of years. As such, it can only be deemed
a good thing that owners scrapped a total of 1,119 ships over the course of
2013, making it an exceptional year for the ship breaking industry. According
to figures compiled by shipbroker Lion Shipbrokers, "the majority of
scrapped tonnage was bulkers, followed by general cargo vessels, containers,
tankers and passenger-ships, while India held the lion’s share.
The New Year 2014 started
positively as breaking yards in Subcontinent are hungry for new tonnage. Local
currencies have finally settled down and steel prices have stabilized. Although
upcoming elections in February are disturbing the Bangladesh scene, levels and
demand remain healthy, with expectations for prices being optimistic, mainly
due to the fact that yards remained empty during the last 2 months (due to
political instability). Pakistan market remained stable while India is back,
securing high profile tonnage (with the local currency being stable against the
US dollar). Chinese market is active mainly due the subsidies available to the
yards for scrapping Chinese domestic owned tonnage and their renewal of
licenses before Chinese New Year holidays", Lion Shipbrokers noted.
Meanwhile, in a separate report,
Golden Destiny noted that "2013 ended with scrapping business being at 26%
lower levels, in terms of number of vessels, than the historical highs of 2012,
but still standing at robust amount as 968 vessels reported to have been headed
to the scrap yards with accumulated dwt of more than 44mil tons. During 2012,
1309 vessels reported for disposal at total deadweight of about 61mil
tons", the shipbroker said.
It added that "with the
opening of New Year, benchmark scrap prices in the Indian subcontinent region
are standing at firm levels, with India being the most competitive by offering
$410/ldt for dry and $440/ldt for wet. The Indian currency fundamentals and
local steel prices are supporting the current high price momentum, while in
Bangladesh; the upcoming elections have created confusion and lower activity.
In China, prices have picked up by $10/ldt for dry and wet cargo and the recent
government incentives for Chinese owners to scrap their vessels locally may
boost further the price sentiment during the first quarter of the year".
In total, over the past week,
demolition activity was 71% down on the week, with a 70% decrease of dry bulk
vessel scrapping and a 60% decline in tanker and container ship scrapping.
"In terms of deadweight sent for scrap, there has been 67% weekly decrease
with 1 demolition deal reported for large vessel size, 1 panamax bulker. China
is reportedly to have won 4 of the 7 demolition transactions, 2 India, 1
Pakistan, while there was no reported activity for Bangladesh. Benchmark scrap
prices in the Indian subcontinent region: $400-410/ldt for dry and
$430-$440/ldt for wet cargo. Scrap prices in China hover at $340/ldt for dry
and $350/ldt for wet cargo. At a similar week in 2013, demolition activity was
up by 5%, in terms of the reported number of transactions, when 19 vessels had
been reported for scrap of total deadweight 975,406 tons with 9 disposals for
bulkers, 1 tanker, 1 liner and 7 containers. Ship-breakers in Indian
subcontinent region had been offering similar levels of the current year,
$400-410/ldt for dry and $425-$435/ldt for wet cargo", Golden Destiny
said.
Finally, according to
Intermodal's latest weekly report, it was noted that after the demolition
market "pulled back as the year kicked off, it seems that some of the lost
ground has now been covered and sentiment has started to strengthen across the
Indian Sub-Continent once again. Indian breakers were confident enough to
increase their bids on dry units on the back of the Indian Rupee behaving
steadily and steel prices settling to levels that provided confidence to local
buyers, who manage to snap the majority of vessels reported heading for scrap
this week. At the same time, Bangladesh seems to have steadily started coming
out of the political unrest as the existing government managed to stay in place
after the general elections that took place on the 5th of January, which
restored some of the market confidence at least for now. The rest of the market
remained quiet with Pakistani and Chinese breakers choosing to sit on the
sidelines, while both prices and activity reflected that very lack of interest
from end buyers in both countries. Average prices this week for wet tonnage
were at around 350-445$/ldt and dry units received about 340-435$/ldt",
the Piraeus-based shipbroker said.
Source:
carbon positive. Thursday, 16 January 2014 02:00
http://www.carbonpositive.net/media-centre/industry-updates/2181-ship-owners-scrap-1-119-ships-during-2013-on-the-back-of-oversupply-issues.html
