Two capesize bulkers have failed to sell for recycling as price levels decline further.

Shipbroking sources said the duo was placed on the market for green demolition, but neither received very favourable offers.

Some reports said offers in the low $520s per ldt were then withdrawn within a day after Indian subcontinent steel markets weakened.

Demolition broker Ed McIlvaney said: “Despite there having been an increased volume of enquiry from various shipowners as to where the current price levels are, this has resulted in a major disappointment for most, as the severe decline being witnessed over the past two weeks has deepened even further this week.”

He pins prices in a range from the low $520s to $530 per ldt. Tankers or heavier container ships and ro-ros can expect the best levels.

“Unfortunately, the shortage of tonnage on to the market is strictly limited and most of the enquiries have resulted in owners opting … to continue to try to make some additional money in the hope that the early part of 2023 will show a return to the higher levels that were seen less than four to six weeks ago,” McIlvaney added.

One older sale reported was that of Ningbo Longsheng Shipping’s 22,300-dwt handysize bulker Tian Yu 2 (built 1989) into Bangladesh at $560 per ldt.

However, a final deal depends on the Bangladeshi end-receiver establishing a letter of credit after the government tightened financing rules earlier this year.

Cash buyer Global Marketing Systems (GMS) assessed prices at $500 per ldt for a bulker, $510 per ldt for tankers and $520 per ldt for boxships.

Just an illusion?

But it admitted that even these levels are “illusory”.

“All recycling destinations across the Indian subcontinent and even Turkey have been suffering a prolonged and agonising malaise over the past six months (at least); one that’s showing no sign of abating any time soon,” it said, adding that some ships with lower ldt have even received offers below $500.

“As such, any shipowner expecting some of the better levels, even from last week, will have to readjust their expectations much lower, in order to bring any sort of firm offer to the table,” it said.

GMS noted that letters of credit are proving to be difficult to get approved, particularly in Bangladesh.

“The government is not sanctioning any fresh letters of credit for vessels, leading to a virtual standstill of the industry there,” it said.

Straight in, straight out

“Indeed, we have seen multiple vessels enter the market and turn straight back around for trading, even at the reduced dry bulk and container levels of today, having either not found a buyer with a ready letter of credit or having suffered embarrassingly low offers.

“Overall, it is expected to be a dark and bleak winter for a withering ship recycling industry, especially after the decade-long high in prices above $700 per ldt whilst business boomed during the early part of this year.”

Eva Tzima, head analyst at Greece’s Seaborne Shipbrokers, said: “With the secondhand and newbuilding markets witnessing endless excitement in the past 24 months, it is no surprise that demolition activity has hardly impressed.

“After all, the pro-investing mood of shipowners can never coincide with busy scrapping periods, with the latter taking place after freight rates have disappointed for a reasonable amount of time, which is usually when people will avoid splashing on new purchases anyway.”

Tzima believes 2022 will see the lowest demolition activity since 2008.