Indian ship recyclers are increasingly prepared to bid at levels that could result in substantial losses based on current prices as competition for a limited number of end-of-life vessels intensifies, according to Wirana Shipping, one of the world’s oldest and largest cash buyers of vessels for recycling.
Indian ship recycling offers have climbed by as much as USD 30/LT LDT in three weeks as competition for limited vessel supply intensifies, Wirana Shipping has reported in its latest weekly market report.
Prices offered by Indian recyclers have increased by approximately USD 30/LT LDT over the past three weeks, supported by an improving domestic steel market but increasingly driven by the shortage of vessels available for recycling. Wirana says recent bids from high-standard recycling facilities demonstrate how the prolonged lack of tonnage is beginning to distort normal pricing dynamics.
India’s local steel market has continued to strengthen, with steel plate prices rising USD 13/MT during the latest week, marking seven consecutive weeks of increases. Local scrap prices rose USD 10/MT, imported scrap increased USD 18/MT, while semi-finished and finished steel products climbed by approximately USD 15–25/MT.
However, Wirana says the strength of the underlying steel market alone does not account for the prices currently being offered for some recycling candidates.
Rakesh Khetan, CEO of Wirana Shipping, said: “We are seeing a situation where the scarcity of vessels is becoming as important to pricing as the value of the steel itself. Some high-standard recycling facilities are bidding very aggressively for the limited tonnage available, even when the economics suggest they could make a substantial loss at current steel prices.”
He added: “Recycling facilities have invested heavily in infrastructure, safety, environmental standards and their workforce, and they need a reasonable flow of vessels to keep those operations active. When supply remains constrained for a prolonged period, competition for each suitable candidate naturally becomes stronger. The danger is that prices can become disconnected from the underlying recycling economics.”
The latest Wirana Demo Market Report & Market Outlook recorded recycling candidates from the dry and offshore sectors being circulated in India, attracting active interest from recyclers. Across the wider market, however, only a limited number of dry, tanker and offshore candidates were circulated during the week, with overall recycling supply expected to remain slow to moderate. The shortage comes as relatively healthy freight, and second-hand markets continue to provide owners with alternatives to recycling.
Robban Assafina is now on WhatsApp channel. Click Here
