Even though the situation on the international shipping markets is currently characterized by great uncertainty, shipowners are holding on to their ships. There is hardly any scrapping activity, as the cash buyer Wirana confirms.
The Singapore and Dubai-based ship recycling specialist is currently experiencing a “rare supply shortage” on the Indian subcontinent. The market, particularly in India and Pakistan, has “entered a rare phase of inactivity”, according to a statement from Wirana today. No ships are currently waiting to be scrapped in India and only one ship is waiting to be recycled in Pakistan.
Wirana is one of the major players in the industry. Over the past 15 years, the cash buyer has handled an average of around 100 to 150 ships per year. The current report describes a market in which recyclers are still willing to buy, but ship owners are still finding economic reasons to keep their older ships in service. The report also warns that “the current sparse influx of LNG tonnage into the recycling market could cease”. It is conceivable that these ships will reach the recycling market later than originally expected, as LNG tankers are currently benefiting from disruptions in the gas supply, high charter rates and a lack of available tonnage.
Rakesh Khetan, CEO of Wirana Shipping, said: “This is a difficult period for Indian ship recyclers in particular: while interest from recyclers remains, geopolitical upheavals are delaying end-of-life decisions. The market is not lacking buyers, but ships”.
Wirana Shipping’s outlook attributes the lack of recycling candidates to the robust market conditions in various shipping segments. Bulker charter rates increased across all size classes over the course of last week, while the container market saw firmer spot rates in some regions and continued demand for time charterers and second-hand vessels. Tanker rates fell slightly in both the oil products and crude oil markets. “However, this is nowhere near enough to cause a significant influx of ships into recycling,” says Khetan.
At the same time, the weakness of the steel market is putting additional pressure on the most important recycling locations. In India, local sheet steel prices have fallen by a further $9 per tonne in recent days, bringing the total price drop to $23 per tonne in three weeks. Prices for local and imported scrap as well as for semi-finished and finished steel products also fell, while Bangladesh continues to suffer from subdued demand for finished steel. “Pakistan remains stable for the time being and supplies from Turkey have improved,” the report continues.
