Demolition activity have come to a standstill. The three major recycling destinations, namely Alang, Chittagong and Gadani, are not allowing entry of vessels or issuing beaching permissions. This is in line with the precautions taken by the respective countries to close their borders to try contain the spread of coronavirus.
Beaching permissions and entry of vessels in Alang, even with Indian crew, are not allowed till 20 APR 2020. The entire country is currently in lockdown for 21 days starting from 25 MAR 2020. Beaching in Chittagong is not allowed till 07 APR 2020. The government have declared nationwide holidays from 26 MAR 2020 to 04 APR 2020 with international flights suspended on most routes. Beaching in Gadani have been banned for four weeks starting from 17 MAR 2020. There is a good possibility these dates may get extended.
Furthermore, crew sign off/sign on is not possible in most of the world's sea ports. This impedes any possibility of "as is" deliveries, especially since a significant number of demolition sales are concluded basis fairly prompt delivery laycan within 15 - 30 days.
Under these circumstances, the sale and purchase of ships for demolition have virtually stopped. Cash Buyers with ships in hand are unable to resell to the ship recycling yards. Vessels, which were committed but not delivered, are trying to extend delivery dates and canceling dates. Not all are being successful as some MOAs are getting canceled with force majeure clause invoked.
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If this situation persists, we are likely to see very minimal demolition activity in the coming few weeks. It is difficult to comment on demolition prices at this juncture. Ship Recycling yards in Chittagong are expecting prices to come down to USD 300/LT levels; while Cash Buyers with expensive inventory will try to hold on to USD 360 - 380/LT levels or close to their earlier purchase prices. It is possible that a large wave of ships may come for demolition when markets re-open. It would be interesting to see which way prices move.
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