Demolition prices could pass $500 per ldt on a regular basis as steel shortages spur recycling interest.

Bangladeshi breakers are particularly hungry for tonnage, market sources told TradeWinds.

"The market has seen a very firm upward movement, driven on by the shortage of steel products on a worldwide basis," said demolition broker Ed McIlvaney.

This has resulted in a "strong upward spiral" in the four major recycling centres, he added.

Bangladesh prices have been by far the strongest, with levels rapidly approaching the $500 per ldt barrier, McIlvaney said.

This level was breached once at the end of 2020, when Japan’s J3 Consortium, a partnership between NYK Line, Mitsui OSK Lines and K Line, sold the 125,835-cbm specialised LNG carrier Senshu Maru (built 1984) for green recycling in India for $523 per ldt. That equates to nearly $15.9m in total.

Other ships to follow past $500?

"It will not be too long before many other units will be crossing that hurdle shortly," McIlvaney added.

TradeWinds reported this week that Hong Kong-registered Fujian Marine sold the 75,500-dwt bulk carrier Wuyi HK (built 1995) into Bangladesh for $478 per ldt.

More sales for demolition in Bangladesh

Other sales have been reported into Bangladesh at healthy levels.

Huaxin Shipping of China has sold the 44,100-dwt bulk carrier Jian Hui (built 1997) for $470 per ldt. It departed China on 2 January. The price includes some bunkers remaining on board, TradeWinds is told.

In addition, Channel Islands company LS Assets disposed of the 29,800-dwt general cargoship Dalian (built 2004) for a reported $480 per ldt. It is expected to arrive in Chattogram on Wednesday.

Two more sales have now emerged from the same group at the same price.

The 78,000-dwt self-discharging bulker sisterships Carol HK and Berni HK (both built 1991) also went into Bangladesh.

This is all a far cry from the $400 per ldt being achieved in November when the Bangladesh Ship Breakers Association ended its attempt to cap prices at between $350 and $370 per ldt initially.

The group, called a "cartel" by some players, was trying to combat what it saw as unsustainable numbers being paid for vessels.

Shipbroker Clarksons Platou Hellas said the higher prices could spark more sales.

"It feels like the recycling market has brought gifts to the shipping industry ... with dramatic price indications upwards by some $30 per ldt from the pre-Christmas levels," the broker added.

The company pointed to several factors explaining the rises.

Steel markets rallying

"Ever-emptying" recycling yards are creating fresh and increasing demand from recyclers, supported by the global steel markets, which are rallying and providing a "bedrock" for the current market, Clarksons Platou Hellas said.

This could continue into the spring.

"Although as has been the case for 18 months now, we are yet to see a glut of tonnage come for sale as spot markets across the dry and wet sectors remain volatile but not depressed enough for owners to dispose of their vintage units yet," the broker cautioned.

"However, it seems to be only a matter of time as current recycling price levels may become increasingly attractive for owners to look to the market."

GMS, the biggest cash buyer of vessels, said it had been an excellent start to 2021 for the recycling sector, as steel gains pushed the markets on again, particularly in a resurgent Bangladesh.

"Following the ban on iron ore imports from Australia, China has started to import scrap steel from international markets once again and this can be partially attributed to some of the stunning rates on show," GMS added.