Cash buyers are finding themselves saddled with more than 30 unsold vessels as a shortage of US dollars in Bangladesh, weak steel prices in India, safety concerns, and weak currency in Pakistan have deterred recycling yards from buying ships.
Prices fell by about USD5/ldt in all the South Asian markets, a situation that cash buyer Global Marketing Systems (GMS) described as “blood in the water”.
GMS said, “There are purportedly about 35 cash buyer-controlled unsold vessels being offered into the various markets. With Pakistan abstaining from the buying after the recent turmoil there and India once again turning inert, much of the focus of cash buyers has shifted squarely on to a previously bullish Bangladesh.
“However, with nearly 20 vessels arriving at Chittagong’s beaches over the past two weeks, many of the financially stable recyclers have already been booked with some of the previously concluded pricier tonnage.”
Many older feeder vessels have been sold for scrap due to falling charter rates.
The lack of letters of credit also have also left some Chittagong recyclers unable to pay for ship purchases.
One ship sales broker in Hong Kong told Fairplay that shipowners must be prepared to accept lower offers or hold on to their vessels until the markets stabilise.
Clarksons remarked, “With several parties suggesting the previous sales were speculative, to say the least, many units remain in the hands of the cash buyers, unsold due to the lack of support from the actual recycling destinations.
“Furthermore, we expect a steady flow of tonnage to supply the market until the end of the year, with freight rates in the container sector continuing to put these units under pressure, which should present the market with many more candidates from this sector. The tidal wave of tanker tonnage that we saw at the start of the year looks to be over as the traditional winter spike in rates has given owners the opportunity to make some gains again chartering their ageing units.”