Scrap prices in the Indian subcontinent continued their slow but steady decline over the past week due to low steel plate demand and the issues over letters of credit and foreign currency access that have plagued Bangladesh and Pakistan for most of this year.
Indicative of the downslide over the past week was the $465 per ldt price, or $4.45m, that China’s Xiamen Xinjunhai Shipping obtained for its 68,600-dwt bulker Great Wenwu (built 1994) in a deal that saw the panamax sold to cash buyers on an “as is” basis in China for redelivery to Chattogram.
Similarly, two of Fujian Ocean Shipping’s panamax bulk carriers, the 73,000-dwt Zheng Hao and 73,400-dwt Zheng Jie (both built 1997), were sold to cash buyers on an “as is” basis in China at $495 per ldt.
This netted the Chinese shipowner a total of $10.5m for the pair, according to Singapore-based Wirana Shipping Corp in its latest market report.
A fourth Chinese-controlled panamax bulker, the 69,000-dwt Yang Fan (built 1997) of Hong Kong-based shipowner Zhongxingchen Industrial, was reported sold on an “as is” basis in Batam, Indonesia, at $540 per ldt, or $5.9m, with the price reflecting enough bunkers remaining on board for a voyage to Chattogram.
Best Oasis said in its latest market report that the current steel market conditions in Bangladesh are experiencing a period of softness, and local prices over the past week alone fell by approximately $18.5 per metric tonne. This, the cash buyer said, is causing recyclers to hesitate about making offers on vessels.
Brokers told TradeWinds last week that cash buyers acquiring tonnage on an “as is” basis had resorted to lower pricing levels based on the Alang market due to the market instability in Bangladesh that could see vessels diverted to Indian recycling yards.
Despite the drop in steel prices and ongoing issues with obtaining letters of credit, Chattogram-based recyclers managed to scoop up the majority of the limited number of vessels that turned up on demolition reports that were published over the weekend.
Taiwan Navigation sold its 4,700-gt ropax Tai Ma (built 1985) on an “as is” basis in Keelung for recycling in Bangladesh. Pricing details were not disclosed.
Fenghui Shipping, a Chinese reefer operator, sold the 6,100-dwt reefer Yun Run 8 (built 1990) to SS Green Ship Breaking & Recycling of Bangladesh at $530 per ldt, or $1.62m. The ship was beached on 24 July under the name Victory.
In contrast, Green Shipping of Norway accepted a lower scrap price of $500 per ldt, or $1.2m in total, when it sold the 5,100-dwt reefer Green Explorer (built 1991) to Alang-based Sai Metaltech for green recycling. The ship arrived off Alang on 23 July. Sai Metaltech is compliant with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships.
As these two refrigerated cargo ships only made it onto the demolition lists subsequent to their beaching, and their sales were likely concluded in either late June or early July, the quoted prices are no longer indicative of current market levels, brokers said.
Another scrap price offer out of Bangladesh that also appears to be an anomaly is the reported $622 per ldt, or $2.9m, that Sinokor Merchant Marine is said to have received for the 834-teu container ship Sinokor Tianjin (built 1998).
Brokers said the Sinokor Tianjin deal included 240 metric tonnes of bunkers on board the vessel, but even then one cash buyer described the price as being “berserk for this market”.
Commenting on the lack of buying from India, Wirana, Best Oasis and Star Asia Shipbroking all noted that despite the lack of offers from ship recyclers at Alang, prices appeared to remain steady.
Star Asia credited the lack of buying activity in part due to the monsoon being at its peak, thus dampening activities and slowing down scrap sales.
“Market participants are hopeful that once the rains subside, there should be a surge in demand for ship scrap by the domestic mills as construction activities resume,” said Star Asia.
Best Oasis said it anticipated that the Alang market will sustain its current levels in the forthcoming months and expect a resurgence in demand before the onset of winter. However, the cash buyer cautioned that the re-emergence of the markets remains uncertain.
Wirana said there was no clear indication of a revival in demand out of India over the next month, but expects that the first week of August will give more clarity on prevailing mixed opinions in the market on whether steel prices have bottomed out.
