Ship demolition prices have been falling across the Indian sub-continent, as local currencies weaken against the US dollar.

Despite the dearth of container ships and bulk carriers being sold for scrap, owing to the firm freight rates in these segments, weak steel demand has weighed on ship demolition.

Greek ship broker Intermodal said in its latest report, dated 25 May, that poor economic conditions in the Indian sub-continent have negatively affected ship recyclers’ appetite for fresh tonnage.

Intermodal said, “A cocktail of severe currency depreciation, coupled with the decreased steel demand and prices and the overall uncertainty due to the ongoing war in Ukraine could not, but affect breakers’ offers. Indian buyers have followed a more conservative approach due to the steel price volatility while Pakistan is facing numerous difficulties in maintaining a competitive role amidst its harsh economic reality.”

Intermodal added that Bangladeshi recycling yards are still seeking tonnage, albeit at lower prices, due to low inventories of vessels.

Dubai-based Global Marketing Systems (GMS), the world’s largest cash buyer of ships for recycling, estimates in its report today that scrap prices have declined by around US$10/ldt. GMS said that in India, prices are averaging US$630/ldt for container ships, US$620/ldt for tankers and US$610/ldt for bulk carriers.

GMS observed that as the Russia-Ukraine war continues, steel prices have fallen, exacerbated by weakening local currencies.

GMS said, “End-buyers refuse to perform or are finding the most frivolous of reasons to abandon deals with the sole intent to talk down the price. Any ship owners therefore seeking offers on fresh units would be well advised to steer clear of the markets for now, as there is likely to be some opportunistic offering that is not reflective of today’s market pricing.”

By Martina Li

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