MSC Mediterranean Shipping Company has obtained the highest scrap price offer for a container ship out of India this year.
The 1,835-teu MSC Tia II (built 1999) is reported to have been sold at $568 per ldt, or $6m, a level only approached a few times this year, typically when a ship was delivered with a high number of spares and a significant quantity of fuel oil on board.
Cash buyers and demolition brokers, while bullish about the Indian ship recycling market’s overall prospects, expressed caution on whether the price paid for the MSC Tia II is sustainable in the short term given ongoing volatility in the Indian steel sector.
They noted that a second MSC-owned vessel, the 24,300-dwt multipurpose general cargo ship MSC Grace F (built 1991), went for a substantially lower $545 per ldt, or $4.1m, suggesting that the MSC Tia II price was likely to have been influenced by the volume of spares and fuel oil remaining on board.
“The local [Indian] steel market is facing a double impact — weaker sentiment due to the unexpected election result plus weaker Chinese property market spillover impact which has also been reflected in prices offered by ship recyclers,” said cash buyer Wirana Shipping Corp, which noted that scrap prices fell by $8 per ldt over the last week.
Rival cash buyer Best Oasis predicted in its latest market report that price offerings out of India will increase after the Eid al-Adha holiday this week, based on “historical trends of market revival following major festive periods”.
While the two MSC vessels attracted strong interest from buyers and were sold at above what Wirana said would be a “generally acceptable end buyer price level”, Singapore-based Star Asia Shipbroking disagreed, claiming the deals underscored the Indian recycling market’s robust strength.
“Last week, Indian scrap prices experienced a correction after several weeks of peaking but overall remained comfortably within the recyclers’ desired range. Recyclers showed strong interest in acquiring ships,” Star Asia director Rohit Goyanka told TradeWinds.
“Demand in the ship recycling sector remains robust. Alang, having been largely inactive for an extended period, is poised to see increased activity in the coming months.
“As Bangladesh and Pakistan struggle with domestic economic challenges, this could provide an opportunity for Indian recyclers to capture a more significant share of ships that traditionally might have gone to Pakistan or Bangladesh due to price differences, which are now seen as narrowing,” Goyanka added.
MSC continues to be one of the most prolific recyclers of container ship tonnage, with the MSC Tia II and MSC Grace F deals bringing the number of vessels it has sold for recycling so far in 2024 to eight.
VesselsValue data indicates the company recycled at least 10 ships in 2023.
But the Geneva-based giant is not the only liner player pruning its fleet. Two other companies were reported to have sold feeder-size container ships for recycling last week.
Contships Management of Greece is said to have sold the 1,096-teu Contship Pro (built 2003) to a Turkish ship recycling facility, while China United Lines reportedly sold the 599-teu Far East Grace (built 2007) to undisclosed cash buyers on an “as is” basis in Taizhou for redelivery to Bangladesh.
Pricing details for these two deals were not reported.
