As local currencies weaken against the US dollar, ship demolition prices have been plummeting across the Indian subcontinent. Despite the lack of container ships and bulk carriers being sold for scrap due to high freight rates in these segments, ship demolition has been hampered by weak steel demand. Poor economic conditions in the Indian subcontinent have harmed ship recyclers’ hunger for new tonnage, according to Greek ship broker Intermodal’s latest report, dated May 25.
Intermodal said, “A cocktail of severe currency depreciation, coupled with the decreased steel demand and prices and the overall uncertainty due to the ongoing war in Ukraine could not, but affect breakers’ offers. Indian buyers have followed a more conservative approach due to the steel price volatility while Pakistan is facing numerous difficulties in maintaining a competitive role amidst its harsh economic reality.”
Intermodal added that Bangladeshi recycling yards are still seeking tonnage, albeit at lower prices, due to low inventories of vessels.
Dubai-based Global Marketing Systems (GMS), the world’s largest cash buyer of ships for recycling, estimates in its report today that scrap prices have declined by around US$10/ldt. GMS said that in India, prices are averaging US$630/ldt for container ships, US$620/ldt for tankers and US$610/ldt for bulk carriers.
GMS observed that as the Russia-Ukraine war continues, steel prices have fallen, exacerbated by weakening local currencies. GMS said, “End-buyers refuse to perform or are finding the most frivolous of reasons to abandon deals with the sole intent to talk down the price. Any ship owners therefore seeking offers on fresh units would be well advised to steer clear of the markets for now, as there is likely to be some opportunistic offering that is not reflective of today’s market pricing.”
