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Week 41 - Ship Recycling Report - Best Oasis

8th October to 15th october 2021

GLOBAL SHIP
RECYCLING MARKETS

Highlights of the Week

The subcontinent recycling market is showing rapid signs of improvement as the demand for steel is soaring day by day. The end buyers are eagerly scouting for available tonnage in the demolition market as the raw material prices have risen sharply and steel producers are turning towards scrap metal for meeting their needs. Offer prices have increased in all three key recycling markets as the availability of tonnage still remains scarce, providing a favorable market condition for owners with aging assets to get the best economic value for their assets. With the current demand supply dynamics, we believe the prices will remain steady and sustain their highs in the coming weeks.

The global energy demand has returned with surprising buoyancy as the pandemic eased in most parts of the world leading to a supply crunch. Oil prices are scaling multi-year highs climbing above USD 85/barrel today as a shortage of natural gas, LNG, and coal boosts demand for oil, which could keep the market in deficit through at least the end of the year.

Iron ore prices continue their volatility due to contrasting market conditions globally. Chinese government, seeking to curb steel production to ensure clean air, has asked mills in more cities in northern China to cut output from November 15 to March 15 as the Winter Olympics are scheduled to take place in Beijing in February 2022.

INDIA

   Tanker:  

580

 USD 

Downward Arrow

   container:   

600

 USD 

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   BULKER:   

565

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Robust demand outlook

The recycling market is going stable with firm price offerings from end buyers backed by rising ship plate prices. The steel market sentiments are currently bullish due to high demand from all major end-user industries especially Construction and Auto industry.

The domestic steel production will slightly get hampered in the coming weeks as the ongoing festival season leading upto Diwali will see majority of the work force going on a break for few days. All Alang based yards are closed today to celebrate Dussehra, a major Indian festival.

Indian rebar prices have hit over 10-year highs as the current coal crisis is severely hitting the induction furnace mills.

BANGLADESH

   Tanker:  

600

 USD 

Downward Arrow

   container:   

620

 USD 

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   BULKER:   

590

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Making a comeback

After a brief phase of dampened demand outlook, the end buyers of Chattogram are back in the race to acquire tonnage to fulfill the rising demand for ship plates in the region. The recyclers were buying time to analyze the market situation and the demand-supply dynamics of steel, but as we keep asserting in our reports, the global demand for steel is here to stay.

The price of raw material for steel producers are rising from all corners, whether it be the increasing container freight rates or the soaring electricity prices driven by coal shortage. This may soon reflect as a rise in re-bar offers from steel mills.

PAKISTAN

   Tanker:  

600

 USD 

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   container:   

615

 USD 

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   BULKER:   

590

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Demand stable despite PKR free fall

The recycling market conditions look promising in Pakistan as stable finished steel demand is boosting confidence of the end buyers who are offering competitive prices. The demand is highly favouring small and mid-sized units as the risk exposure is low in such assets. The deterioration in the value of PKR has slightly shaken the risk appetite of the buyers.

Pakistan’s Rupee continues registering record lows on account of a widening current account deficit, and rising imports. Its impact is being highly felt in the margin of the end buyers who have finalized deals in previous rates. It is currently trading at PKR 170.50/USD.

Major Steel mills have lifted rebar offers by USD 15-20/MT as the shredded scrap prices have considerably moved northwards and currency depreciation is adding to the cost of imported scrap.

TURKEY

   Tanker:  

330

 USD 

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   container:   

340

 USD 

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   BULKER:   

320

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Lira hits record lows

The scarcity of vessels available in the demolition market and rising imported scrap prices have led to an increase in the offer prices to acquire tonnage. The prices across the different vessel segments have increased by USD 10/LDT from the previous levels. Turkish Lira dropped to a record low this week adding to the monetary instability in the nation and is currently trading at TL 9.21/USD. Experts believe that shifting towards an easing interest policy despite the high inflation caused the national currency to weaken. Foreign investors decreased their investments in Turkey by approximately 3.5 billion dollars in the week following the interest rate cut.

Due to continuous hike in imported scrap prices, the domestic Steel mills have increased their rebar offers by USD 15/MT which are now standing at USD 715/MT exw-levels.