With less than two weeks to go before the end of 2023, ship recyclers on the Indian subcontinent look set to have endured their worst fourth quarter for the past three years.
Data compiled by cash buyer Wirana Shipping Corp shows that during this quarter, Indian recyclers have so far acquired 33 ships totalling 257,154 dwt. While they may have only acquired 22 ships during the last quarter of 2022, this was meatier tonnage totalling 271,7129 dwt.
However, the fourth quarter of both these years paled in comparison to the 55 ships totalling 403,438 dwt acquired during the corresponding quarter of 2021.
Buying from Indian recyclers was sluggish during the fourth quarter, as it has been for much of the year. A lacklustre recycled steel market, hard hit by cheap Chinese steel exports, saw Indian recyclers unable to offer pricing levels that would entice owners to recycle ships enjoying a strong trading environment.
The only significant deal reported for Alang’s recyclers over the past week was Chinese owner Fujian Shipping’s 28,600-dwt bulk carrier Jin Hai Xi (built 1995), which went for $506 per ldt, or $3m. Several small tugs were also reported as being sold to Alang.
Bangladeshi recyclers, plagued for more than a year by difficulties securing letters of credit, saw their purchase activity during the fourth quarter of 2023 plummet to 21 ships totalling 114,623 dwt, down from 32 ships totalling 236,479 ldt in the corresponding quarter of 2022, and 57 ships totalling 572,571 ldt in 2021.
Typical of the size of ships that most Chattogram-based recyclers have been able to buy without needing credit is the Taiwanese-owned, 2,500-gt general cargo ship Shun Shin (built 2005), which was sold last week on a delivered Chattogram basis for an undisclosed price.
However, Bangladeshi recyclers still have the financial resources to buy larger ships in cash. One such recycling facility has been able to acquire Xiamen Yichengda Shipping’s 12,800-dwt multipurpose general cargo ship Yi Cheng 58 (built 2007), which was reported as being sold to Bangladesh for $490 per ldt, or $2.1m, last week.
Pakistani ship recyclers, completely absent from the market for most of 2023 because of their country’s crippling foreign currency problems, managed to stage a brief comeback in the fourth quarter, buying three ships totalling 42,700 ldt, which is around the same figure for the corresponding quarter of 2022.
Nevertheless, it was a far cry from the 34 ships totalling 234,511 ldt that ended their days on the shores of Gadani Beach in the fourth quarter of 2021.
No ships were reported as being sold to Pakistan over the past week.
Deals involving ships reported sold to cash buyers last week show that there are slim pickings in the demolition sales market, with larger ships conspicuously absent.
Hungry ship recyclers with the resources to buy tonnage will be forced to spend the remaining days of 2023 fighting over Marfat Maritime’s 6,400-dwt multipurpose general cargo ship Corscia (built 2001), sold on an “as is” Singapore basis for an undisclosed price, and Kuwaiti owner Al Manar Factory Production’s 7,100-dwt multipurpose general cargo ship (built 1985), sold on an “as is” basis in Dubai for between $445 and $450 per ldt.
The situation for the early part of 2024 looks equally bleak. Cash buyer Best Oasis reported that with China’s latest steel export bids coming in at 10% to 20% below market pricing, Indian steel producers are refraining from submitting any export offers, a move that is having an overall negative impact on the country’s steel sector.
Singapore-based Star Asia Shipbroking said in its latest market report that there are strong concerns that Bangladesh’s foreign exchange crisis is likely to intensify in early January, potentially extending throughout the first quarter of 2024.
As for Pakistan, the country still has a long way to go to rebuild its foreign reserves before it can once again be the buying force that it was in 2021, cash buyers and brokers said.
