After a few weeks of subdued activity, it seems that the ships’ demolition market has started to be active once again. In its latest weekly report, the world’s leading cash buyer of ships, GMS, said that over the past week, “this week, a few owners and cash buyers finally started to accept the new market reality on prices and several sales were subsequently recorded at previously unthinkable levels (especially those into India). The tanker sector recorded the most exits this week as a couple of LNGs were concluded to Turkish buyers, in addition to two suezmax tankers and one aframax tanker that will be making their way towards Indian shores while Pakistan remains closed to tankers, due to the tragic explosions that took place onboard the FSU and LPG earlier this year. There is still no clarity as to when the Pakistani market might reopen for tankers again and it is certainly going to be the case going forward where all wet units heading for Gadani will have to be gas free for hot works clean with all cargo residues, slops and sludges totally cleaned from all cargo and slop tanks (as has been the requirement from competing Indian and Bangladeshi markets)”, GMS noted.

Meanwhile, according to GMS, “it remains an extremely sensitive issue with the Pakistani government and the Pakistan Ship Breakers Association (PSBA) who are keen to ensure that no further tragic / fatal accidents occur onboard tankers again. Bangladeshi buyers remain largely beset with the recent bad news from their budget and very little activity has consequently taken place there whilst they petition the finance ministry to overturn the exorbitant new taxes / duties recently imposed. Despite the degraded sentiment, one uncharacteristically high priced bulker sale to a clearly bullish end buyer was concluded into Chittagong this week. However, the hope remains that these duties will eventually be overturned, but for the time being, prices remain hamstrung by the looming prospect of USD 40 – USD 50/LT being taxed (and eventually deducted) on fresh / incoming units”, GMS concluded.

In a separate note, shipbroker Clarkson Platou Hellas, talked about “another week in the shade compared to the rest of the shipping industry and it seems now that this re-occurrence of lack of activity and tonnage availability is shaping up as to how the general position will be for the summer months ahead. This is further highlighted by the fact that, on current statistics, it is suggested we are operating with a 50 percent lower supply than at the same period last year. As freight rates, particularly in the dry sector, remain steady, albeit slightly weaker, this further cements the inclination that a quiet summer in predicted”.

The shipbroker added that “unfortunately, there are now also further concerns in relation to the new Indian sales tax that was included in their budget earlier this year, but set to come into place next month. More concerns are now evident that this ‘Goods and Services Tax’ (GST) will create uncertainty and negative aspirations next month which is the last thing this industry needs. Further details of exactly how sentiment and, subsequently, prices will be affected is yet to be determined and with the Bangladesh Shipbreakers Association still trying to reverse their own Governments duty increase, these are certainly testing times for the industry as a whole. However, let us not forget that we are currently talking price levels back to the rates which opened 2017. Therefore this quiet and fairly inactive period is set to continue for the foreseeable future and the uncertainty shrouding the market may continue until the end of Ramadan (24th June) and, the following Eid Holidays where hopefully some positive news can be sought to maybe kick-start the market back into play”, Clarkson Platou Hellas concluded.

Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide