Shipowners have had to settle for less than USD400/ldt for Capesizes as such vessels are flooding the recycling market.
Cash buyers do not expect the barrage of Capesizes to stop anytime soon, with no sign of an improvement in freight rates, which, at below USD6,000/day, are grossly inadequate to cover operating costs. It has been estimated that so far, at least 50 Capesizes have been scrapped or sold for recycling.
Dubai-based Global Marketing Systems (GMS), the world’s biggest cash buyer, said that prices of bulkers are now averaging USD360/ldt in India and Pakistan, with Bangladesh lagging behind by USD10/ldt.
Tankers are only faring slightly better, with prices ranging from USD380-390/ldt in South Asia.
GMS said, “The Indian rupee has been the chief concern this week, trading into the INR64 against the US dollar, after a dramatic depreciation from a settled INR62. Some encouraging signs were seen come end of the week, as the rupee dipped below INR64 again – but this extreme volatility has certainly shaken the domestic ship-recycling industry of late.”
Due to the negative moves on the currency and sliding steel prices, many end users seem intent to wait and watch market movements before committing on new vessels, with the hope that some stability will emerge once supply eases up and local fundamentals settle.
Glory Asia Ocean Shipping’s 1991-built Capesize bulker Fengli 1 fetched USD7.04 million or a relatively decent USD382/ldt for demolition in Bangladesh, as it had about 800 tonnes of bunkers remaining on board upon delivery.
Another Capesize, Leader Ship Management’s 1987-built Onega, was sold for USD8.07 million or USD372/ldt for recycling in India as a sale into Pakistan failed due to yards there being overstocked.