Cash buyers with large and expensive ldt vessels to sell are still hoping for a change in fortune, as the industry enters the fourth quarter of the year, GMS said in its weekly report.
However, it is very likely that the previous pricing realities of the mid-$400s from earlier in the year will not return any time soon.
The only positive is that with freight rates remaining firm, there has been a considerable decline in the supply of potential tonnage.The current pricing trend has not tempted shipowners with ageing units to sell their ships at this particular time.
While Bangladeshi steel prices have not suffered a fate similar to their Indian counterparts, VAT related issues continued to linger, despite the BSBA’s confidence about overturning the ruling that was delivered during the annual budget back in June.
Moreover, a healthy amount of previously delivered tonnage was still lying at local yards, with the constant rains proving a challenge for local recyclers to shift units over the summer months.
Of all the sub-continent markets, India has endured the toughest time, as local steel prices crashed by about $75 per ldt since early July and the currency has also depreciated from Rs69 to briefly over Rs72 against the US dollar, in a damaging turn of events.
Remaining in the sub-continent recycling market, Pakistan, which is out of the game, due to an overall lack of confidence to re-enter the buying arena following over a year on the sidelines, has resulted in minimal offers emerging from local buyers.
Finally, the Turkish markets ongoing sufferings were further aggravated last week, as local plate prices and the Lira both took turns at deteriorating, which, as a result, imminent vessel price declines could be on the horizon.
Local port reports testified to a dwindling supply of vessels arriving in the sub-continent locations. There were no new arrivals at Alang or Chattogram last week, for the first time in ages. This should potentially allow the vessels already in Bangladeshi yards to finally be digested and demand to return, GMS concluded.
In another report, scrapping activity in the crude tanker market this year and next is expected to rise on the back of IMO’s Ballast Water Management Convention (BWMC), which enters into force next week.
The real impact of the regulation will be seen only after the implementation of IMO2020, said shipping consultancy, Drewry (see item above for details).
Drewry also said that owners of vessels older than 15 years are more likely to scrap ships, due to pressure to comply with the IMO2020.
About 21% of vessels in the existing fleet fall within this category, which suggests that scrapping activity will surge in the coming years. However, the impact of BWMS on scrapping activity in the remaining months of 2019 will be modest, as out of 100 crude tankers (without BWTS) due for special survey in 2019, only 25 crude tankers (1% of the fleet) are 15 years or older.
Nonetheless, scrapping activity, which has been subdued thus far this year, will rekindle before surging in 2020, Drewry forecast.
Illustrating the low prices being quoted at present, GMS reported that the 1994-built Suezmax ‘Ankleshwar’ had been sold to Bangladesh interests for $368 per ldt on the basis of ‘as is’ Colombo.