Sales of ships for demolition slumped from 6 to 10 July as Greece's
financial crisis and China's stock market crash made scrap yards unwilling to
acquire tonnage.
Bulkers, especially, had a hard time attracting buyers due to the ongoing
deluge of such ships being sold for recycling.
The Baltic Dry Index's slump to a historic low in February and the slow
market recovery are encouraging shipowners to part ways with unprofitable
vessels.
As a result, scrap prices of bulkers have fallen to USD325-335/ldt,
compared with USD330-340/ldt from 29 June to 3 July.
In Bangladesh, an ample supply of ships combined with difficulty in
securing letters of credit have prevented ships from being sold.
Dubai-based cash buyer Global Marketing Systems (GMS) said, "Many
banks are refusing to sanction letters of credit due to the perilous state of
the industry. Moreover, as with India, there are questions over the financial
security of even some of the better buyers in Chittagong."
However, some cash buyers are still speculating on an eventual market
recovery, resulting in 1983-built Handysize bulker Merry Ocean fetching USD1.89
million or an unbelievable USD360/ldt, a deal GMS claimed would result in
losses for the shipowner or cash buyer.
Related news: Shipbreaking prices sour further
Merry Ocean's 220 tonnes of leftover bunkers resulted in the higher price
when it was sold for recycling in India.
"The one encouraging factor saw the Indian rupee maintain its
reasonable rate at about INR63 to the US dollar, although most connected to the
industry expect the currency to depreciate given the current global economic
conditions," said GMS.
"The fear is that an import of cheap Chinese steel will flood the
market again, resulting in the inability of end users to shift their
high-priced inventory from their yards quick enough - something that has
already seen several high-profile recyclers forced out of business."
In Pakistan, the imposition of USD10-15/ldt in taxes on ships, and the
fact that yards are full with bulkers, have deterred recyclers from buying
ships.
Source: ihs maritime. 14 July 2015
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