Hong Kong Convention (HKC)-compliant recycling facilities in India took all the tonnage sold for demolition over the past week as high-profile owners IMC Industrial Group, MSC Mediterranean Shipping Company and Gearbulk cleared their decks of older ships.
Their decision to accept lower prices for green recycling in a market in which scrap values are falling highlights the increasing momentum by shipowners to seek out compliant facilities to dispose of unwanted tonnage.
In MSC’s clear-out of older container ships, the 1,893-teu MSC Lucia (built 1985) got the chop. The Geneva-based liner giant sold the ship for $525 per ldt, or $4.67m.
This was considerably less than the $550 per ldt price that MSC got for the 3,922-teu MSC Veronique (built 1989) when it was sold to Alang at the end of March, and the $544 per ldt obtained for the 4,814-teu MSC Pilar (built 1990) when it was sold just one week before the MSC Lucia deal was tied up.
Rohit Goyanka, managing director of Singapore’s Star Asia Shipbrokers, said recycling prices in Alang declined by $20 to $30 per ldt over the week.
Unprofitable prices
The specialist recycling broker attributed this to factors including the global decrease in prices for ferrous scrap, semi-finished and finished steel products and iron ore, along with the increased availability of cheaper imported alternatives for ship scrap.
Cash buyer Best Oasis also noted in its latest market report that recyclers in India have been paying high prices in recent weeks despite unfavourable market conditions due to a shortage of available ships. “At the current price levels, the end buyer is unable to generate a profit,” Best Oasis said.
Alang secured two other vessels during the week, both of which were sold for green recycling at HKC-compliant facilities.
Aurora Tankers, the hydrocarbons transport arm of the IMC Industrial Group, was reported to have sold the 45,400-dwt product tanker Maritime Lira (built 1998) for $520 per ldt, or $6.36m.
Gearbulk sold the 42,900-dwt transshipment vessel Kumul Arrow (built 1985) at $560 per ldt, or $6.15m.
The higher price for the Kumul Arrow suggests that the deal may have been concluded just before scrap prices fell.
The final recycling deal reported for the past week involved Anglo-French oil producer Perenco’s 323,100-dwt floating storage and offloading vessel Fernan Vaz (built 1979). The former VLCC was sold to cash buyers on an “as is” basis in Gabon for $277 per ldt, or $11.65m.
According to brokers, the ship will have to be towed from West Africa to its recycling destination, which has yet to be disclosed.
Neither Bangladesh nor Pakistan acquired any tonnage during the week.
Cash buyer Wirana said in its latest market report that recyclers in Pakistan continued to sit on the sidelines as there was low demand for scrap steel in the country, which faces severe foreign exchange problems.
Wirana said prices offered out of Bangladesh fell by about $20 per ldt, and attributed the lack of buying activity to the market being closed for Eid holidays.
