India’s ship recyclers have moved to fill the gap left by problems in Pakistan and Bangladesh as prices rise.

The inability of end buyers to open letters of credit with state banks due to a foreign currency crisis means Alang breakers are in the driving seat.

The 1,725-teu feeder container vessel SSL Kochi (built 1998) was reported sold into India at $581 per ldt or $5m, with bunkers included.

VesselsValue assesses the feeder unit as worth $5.6m for further trading, or $4.7m as scrap.

Delivery will be either in Sri Lanka or Jebel Ali at the seller’s option.

The operator is Shreyas Shipping & Logistics, which has been contacted for comment.

Demolition broker Ed McIlvaney said: “With both Bangladesh and Pakistan continuing to have banking difficulties, the market is very much open for the recyclers in India to capitalise while they have the opportunity to close out what few vessels are actually placed to the market.”

Domestic steel producers are hungry for metal, sending scrap levels surging, he added.

Big cash buyer Global Marketing Systems (GMS) is quoting Indian prices for container ships at $560 per ldt.

Brokers have, meanwhile, reported a price of $510 per ldt for each of Wan Hai Lines’ 10 elderly handysize and feedermax vessels, for which a deal is thought to have been struck earlier in January.

The fleet has been sold into India, but it is not yet clear if one yard has taken the lot.

On the dry side, there is talk of an unnamed capesize unit on the market, with the owner hoping to achieve $575 per ldt.

GMS noted “increasingly firm numbers” and “a degree of increased positivity” in the recycling market as higher steel prices drive demand in India.

Different solutions sought

Financing problems persist in both Bangladesh and Pakistan, but end buyers are trying to find alternate solutions to open letters of credit, which have rarely been successful at this stage, the company said.

Some recyclers have tried using private financing, not state banks, as well as letters of credit in foreign currencies.

“Plots across most locations remain fairly barren after one of the slowest years (in terms of recycling volumes) in decades and as such, demand for new units is ramping up across all markets and as prices increase, so too do the number of available candidates for sale after a relative dearth at the end of last year,” GMS said.

“Overall, the supply of vessels is mostly coming from the container sector, and an increasing number of Hong Kong Convention green sales — thus putting the deal focus squarely on Alang [in India] for another week,” the company added.

GMS believes more bulker candidates will be coming to the market as rates weaken.

Bulker candidates

Another cash buyer, Wirana Shipping Corp, said of the Indian market: “Indian rupee has shown some stability with an inkling towards strengthening, adding to positivity.

“Supply of fresh tonnage is seen but is still low. On an overall basis, we would expect prices for fresh tonnage to strengthen,” the company added.

Wirana said the Pakistan Ship Breakers’ Association had a meeting with the State Bank of Pakistan about the foreign exchange situation.

Bank governor Jameel Ahmad promised that a dollar influx would be seen in the coming days after funding commitment from the Middle East.