Indian and Bangladeshi ship recyclers managed to score an eclectic mix of demolition candidates over the past week despite a tight supply of tonnage.
Prices remained stable but under pressure as bulk carriers dominated the reported recycling deals. Some more unusual candidates also made an appearance.
Once such vessel was the Royal Malaysian Navy’s auxiliary ship Bunga Mas Enam (built 1997), which was sold for green recycling under “strict” Hong Kong Convention-compliant terms in India on an “as is” basis in Port Klang for $320 per ldt.
Despite its military role, the Bunga Mas Enam was built as a 699-teu container ship for Kuala Lumpur-based MISC Berhad but underwent an extensive conversion for its military role when sold to the Royal Malaysian Navy together with an identical sistership in 2011.
Indian recyclers managed to find another scrap candidate in Malaysia. EA Technique’s 39,800-dwt storage tanker Nautica Muar (built 1992) was reported sold on an “as is” basis in Johor at $426 per ldt, which nets the FSO operator in the region of $5.2m. The low price reflects the need for the ship to be towed to Alang.
More reflective of current pricing levels are the sale of a container ship and several bulk carriers.
MSC Mediterranean Shipping Company was reported to have obtained $525 per ldt, or $4.6m, for the 1,879-teu container ship MSC Floriana (built 1986). MSC is said to have “handpicked” the HKC-compliant yard after a stringent vetting process.
Singapore-based Star Asia Shipbroking said that scrap prices in India would likely remain under pressure in the short run due to the recent catastrophic earthquake in Turkey, which it expects will add additional stress to the Indian scrap markets.
“Importers are on wait-and-watch mode for the time being as they fear that several bulk shipments for Turkey may be diverted to India until Turkish mills resume after settling down,” said Star Asia director Rohit Goyanka.
“For the ship recycling markets, the long-awaited ship supply dearth was now seen easing. Talks of several container ships have surfaced this week, and the first MSC container was reported sold for specific yards as chosen by the owner after its strict due diligence,” he added.
Cash buyer Wirana said that market sentiment among Indian recyclers remains weak, noting that the positive sentiment in the Indian steel industry following the recent announcement of a $122bn infrastructure spending bill has yet to trickle down into the recycling sector.
“There is an opinion among some sections in the secondary mills and smaller buyers that the capital expenditure increase in the national budget will only benefit large integrated steel mills,” Wirana said.
Bangladeshi recyclers accounted for all the bulk carriers reported over the past week, the largest being Indian owner ACS Marine Services’ 74,000-dwt bulker Mahavir (built 2000), which was said to have sold on an “as is” basis in Colombo for an undisclosed amount.
Fuhai Shipping’s ancient 46,600-dwt bulker Fu Hai 616 (built 1977) was reported sold to Bangladesh for an undisclosed price. The ship’s 46-year career is ending under the name Ning Feng 316 under the ownership of Hong Kong-based intermediary Wantong International Group, which acquired the vessel in early February.
Limited options
Rounding up the list of vessels reported sold for recycling in Bangladesh over the past week were two smaller ships that recently arrived in Chattogram, suggesting that these were older deals that had not yet been reported in the market.
Japanese ferry operator Kato Kisen’s 3,600-gt ropax Konpira No. 2 (built 1989) arrived off Chattogram on 7 February. It was reported sold to a non-HKC-compliant facility for $400 per ldt, or $1.4m, on an “as is” basis in Japan.
Finally, a small molten sulphur tanker that most recently traded in the fleet of Sharjah-based Nabeel Shipmanagement, the 4,287-dwt Rose (built 1998), was sold on private terms and beached at Chattogram on 11 February.
Cash buyer Best Oasis cautioned that only a small number of buyers in Bangladesh can create letters of credit using private finance, leaving limited options for cash buyers and owners with vessels to sell.
No ships were reported as sold to recyclers in Pakistan, who continue to suffer from ongoing letters of credit issues and the Pakistan government’s inability to reach a bailout agreement with the International Monetary Fund to avert a sovereign default.
