As scrap prices dwindle, five unnamed members of the Bangladesh Ship Breakers Association (BSBA) have formed a pricing cartel to control prices on available tonnage into Chittagong, which commentators say will result in fewer vessels heading to Bangladesh for demolition in the near future.
The cartel hopes to secure fairly priced ships for its buyers. Many shipbreaking yards in Bangladesh have posted huge losses over the past year.
“It remains to be seen just how long this cartel will last, bearing in mind some of the prices quoted on certain units appear to be about $50/LDT behind what Indian and Pakistani buyers are offering. Therefore, we expect most of the dwindling supply of vessels to be diverted away from Bangladeshi shores in the foreseeable future,” GMS, the world’s largest cash buyer of ships, commented today in its weekly market report.
Only seven vessels have been sold for demolition in Bangladesh over the past four weeks, compared with 21 vessels in the preceding four-week period.
During the past week, Bangladeshi buyers have been offering $250/ldt for general cargo vessels, $30/ldt lower than India and $25/ldt less than in Pakistan.
For tankers, Bangladesh has been offering $280/ldt, again $20/ldt to $30/ldt lower than its competitors on the subcontinent.
“If end buyers are keen to acquire new vessels, a review of the system may be required yet again,” GMS said.