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Week 51 - Ship Recycling Report - Best Oasis

17th December to 24th December 2021

GLOBAL SHIP
RECYCLING MARKETS

Highlights of the Week

Heading into the last week of the year, we have seen multiple cycles of highs and lows in 2021 which started with the levels of USD 450/LDT in January to crossing USD 500/LDT in April and leaping to USD 600/LDT in June, thereafter, remaining in the range of USD 650/LDT till October and again retreating back under USD 600/LDT in December. This has clearly reflected the volatility of steel prices but more important is the fact that the overall price level has risen by 30% which is a significant escalation for a period of just one year. It concludes the fact that prices may fluctuate in short term, but the fundamentals for steel have remained strong.

The availability of units in the demolition market remains low as the tanker owners are holding back their vessels to wait for an uptick in charter prices.

Oil prices reach four-week high on Thursday with Brent crude touching USD 76/barrel backed by positive economic data, declining U.S. crude inventory and reduced fears of Omicron-induced demand slump. Beginning the year at USD 52/barrel, Brent crude rose to USD 86/barrel this month and the market can safely presume a stable demand in 2022 unless there are any unexpected turn of events curbing the demand of oil.

Iron ore prices surged this week on restocking demand at steel mills ahead of new year holidays and renewed optimism over demand from China as Beijing has met its yearly target to control emissions.

INDIA

   Tanker:  

575

 USD 

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   container:   

595

 USD 

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   BULKER:   

560

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Market remains muted

The continual correction of steel prices in the domestic market is eroding the risk-taking appetite of end buyers who are now waiting for the market to stabilize before making offers to secure tonnage. There’s a further reduction of about USD5/LDT in the offer price from Alang as the buying interest remains low. Currently, Indian buyers are standing far behind their counterparts from Bangladesh and Pakistan in terms of their offer prices.

Indian HRC export prices hit 9-month low by falling about USD 25/MT this week as the trading activities remained subdued in the importing nations with the ongoing Christmas and New Year holidays.

BANGLADESH

   Tanker:  

615

 USD 

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   container:   

635

 USD 

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   BULKER:   

605

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Cautious Buying approach

The offer prices from Bangladesh remained stable this week as the domestic demand sustained the current price levels. The recyclers from Bangladesh are leading the price board in the subcontinent market.

Trading activities have remained low this week as the steel mills are not considering to lower their rebar offers as they have purchased raw materials at elevated price levels and reducing the prices further will significantly hurt their margins whereas the bids from end users are comparatively low keeping in tune with the global prices.

PAKISTAN

   Tanker:  

605

 USD 

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   container:   

620

 USD 

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   BULKER:   

595

 USD 

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LOW

MODERATE

HIGH

N/A = NOT AVAILABLE

Market engulfed in uncertainty

The recyclers are clouded with uncertainties arising from global downtrend in steel prices and devaluation of Pakistani Rupee. Though few deals have been concluded by end buyers this week, there is a further decline of about USD 5/LDT in the offer prices.

Pakistan's foreign currency reserves are depleting after the persistent stalemate over the renewal of the IMF package. The Government has to opt for short-term commercial loans to meet its annual budgetary targets on external inflows while the country waits for IMF’s 6th review on 12th January 2022. The long-standing volatility has taken a heavy toll on the stock market as well. It is currently trading at PKR 178.49/USD.

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 rebounds following Govt measures

The domestic as well as imported scrap prices have further softened by USD 5/MT this week. Most of the buyers who do not have any pressing need to procure raw materials are staying away from the market owing to the instability of Lira and weaker finished steel demand.

Steel mills in Turkey are under constant pressure to continually revise their prices to maintain a balance with the fluctuating currency.

The Turkish Lira has seen dramatic gains this week after President Erdogan unveiled a new plan to compensate savers for inflation that has eroded the value of bank deposits held in lira. According to Central Bank data, Lira has lost so much trust that more than half of savings in Turkey are in foreign currencies and gold. It is currently trading at TL 11.89/USD.