A group of Bangladeshi ship breakers that had tried to limit prices paid for demolition tonnage has called a halt to its concerted action.
The group, called a "cartel" by some players in the industry, was formed by the Bangladesh Ship Breakers Association (BSBA) in September.
One demolition broker told TradeWinds that the grouping has now come to an end.
This followed "mounting pressure from the ship recyclers, who have been unable to secure tonnage due to the prices quoted being too low to secure the volume of tonnage usually being placed to the market", the broker said.
Two cash buyers have also confirmed the news.
The BSBA was contacted for comment.
The group had tried to cap prices at $350 per ldt in a bid to halt what it saw as unsustainable levels.
There was some initial success, with a number of breakers securing vessels below this level, although not all players stuck to the cap.
Prices crept up
But as Pakistan buyers continued to bid high, Bangladesh started to pay rising fees for tankers of between $370 ldt and $380 ldt.
Shipbroker Clarkson Platou Hellas said two weeks ago that the group had increased its price limitations.
"However, the increase may still not be enough to compete with the recyclers in Pakistan," the broker said.
Diwali festivities muted scrapping activity last week in the Indian subcontinent, but by Friday a "considerable" number of sales were reported, a broker said. Price levels were said to be holding at strong levels.
The 11,098-ldt laid-up handysize tanker Sam Purpose (built 1997), formerly owned by NTS Shipping, was sold in Nigeria at $225 per ldt.
The vessel will need to be towed to breakers, with Pakistan seen as the most likely destination.
Chemical carrier sold
But Indian breakers have been competing strongly for tonnage, brokers said.
Among other recent deals, Beykim Petrolculuk Gemi’s 2,238-ldt chemical carrier Narlica (built 1992) fetched $670 per ldt — a high level that is explained by the ship’s stainless-steel content.
Prices for conventional tonnage are anywhere from $370 to $390 per ldt currently.
Clarkson Platou Hellas foresees Covid-19 lockdowns hitting the business for some time yet.
"We are almost back to square one again, with this vein set to continue until the end of the year at least, with little tonnage being proposed and the virus affecting all livelihoods and working environment," the broker said.
The company views continuing low freight rates for tankers as key to unlocking demand.
"We could see in the first quarter of next year a significant proportion of VLCCs enter the market," the broker added.
