Bangladeshi shipbreakers that are trying to keep a cap on scrap prices are becoming more generous, according to demolition brokers.
Four old tankers were reported to have been acquired by the group, which has been referred to as a "cartel" by some other industry players.
The group was formed by the Bangladesh Ship Breakers Association in September to limit what it saw as unsustainable prices to $350 per ldt.
But the 9,640-ldt Alba (built 1998) and 4,815-ldt Medelin West (built 1990), formerly owned by Waruna Nusa Sentana of Indonesia, were sold into the country at $387 per ldt because they had some stainless-steel content.
The smaller 10,000-dwt Prospery (built 1995) achieved $361 per ldt, while the 9,200-ldt Jet (ex-Project Link, built 1989) — another Waruna Nusa Sentana vessel — managed $385 per ldt.
Demolition broker Ed McIlvaney doubts how effective the "cartel" has been for tankers, although the group had managed to buy some other vessel types below the $350 mark last month.
Prices edging up
He told TradeWinds: "The cartel price for tankers was always way above the $350 mark; originally $365 to$370, then increased [to] $370 to $375, and again to $375 to $380.
"Not sure how long it will last, but the cash buyers were GMS and Best Oasis, so the raise in prices proved to be sufficient inducement to ... offload some of their stockpile."
After what was described as an extremely slow start, the market burst into life in recent days.
"Pakistan has once again been very busy securing four units at very competitive prices," McIlvaney said.
One of these was the 6,011-ldt handysize bulker ABK Trader (built 1991), formerly owned by ABK Maritime of Lebanon, which was sold at $395 per ldt.
Pakistan appetite waning?
But McIlvaney believes Pakistan is beginning to weaken, so it will be "interesting to see where the market shapes up" by Friday.
Allied Shipbroking said Pakistan had held its lead in offered price levels.
"However, it remains to be seen whether this good momentum can be sustained if the tonnage capacity available for demo starts to drop, or inventory starts to pile up," the broker said.
"Things in Bangladesh, on the other hand, seem rather stagnant, since the start of the price control put in place. With the exception of a few small ldt units, the market is struggling to secure its share of market tonnage."
Cartel should take note
Clarksons Platou Hellas said "the emphasis" centred around Pakistan in recent days as prices rose.
That may be the catalyst for the Bangladeshi cartel to "take note, watch and learn, as they appear to be losing ground to their counterparts elsewhere on the back of their weaker rate limitations currently set".
"Unless there is a sudden change in their ideas, the Bangladeshi recyclers could well be set for a lengthy spell on the sidelines — and it would be interesting to see whether extra pressure is placed on the cartel formation," the company said.
GMS — a major cash buyer of ships for demolition — said Bangladesh has been hamstrung by the formation of the group seeking to control prices.
"This has seen Pakistan retain their status as the number one subcontinent destination, as a majority of non-green market vessels continue to head to Gadani shores," the company said.
