Demo prices have shot up soaring global steel prices and fierce competition between Pakistan and Bangladesh for limited tonnage.
The 1998-built handy bulk carrier Vika has recently fetched $550 per ldt in Pakistan, a price considered “unthinkable” a few days ago, demo broker EBM reported. One chemical tanker with more stainless steel, Glory Shipmanagement’s Falcon, even managed $750 per ldt.
“The demolition prices are reaching newer heights week on week as the end buyers from Pakistan and Bangladesh are constantly out-bidding each other in this intense competition to secure tonnage. Ongoing conditions such as strict lockdown in India and Bangladesh, shortage of oxygen and the upcoming festival holidays have definitely impacted the operations of recycling yards but have not been able to cause any significant change on the steel demand and rising prices,” demo specialists Best Oasis noted in a weekly update.
In Pakistan, the government has halted ship recycling activity this week as demand for oxygen from hospitals continues to grow, amid increasing Covid case numbers. In India, the rising volume of Covid-19 cases and diversion of oxygen supplies to hospitals means that recycling activity has ground to a halt. In Bangladesh, the national lockdown has been extended to May 16.
Despite the prices on offer being above $500 per ldt, owners are not rushing to beach their ships just yet, amid hot freight rate conditions for many sectors.
Tanker broker Poten argued in its most recent weekly report that high scrap prices are rarely a key driver for scrapping behaviour.