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Lila Global Scraps Capesize Bulker : Marking First of 2024 and Highlighting Resurgent Pakistani Ship Recycling

Lila Global Scraps Capesize Bulker : Marking First of 2024 and Highlighting Resurgent Pakistani Ship Recycling

Lila Global Scraps Capesize Bulker : Marking First of 2024 and Highlighting Resurgent Pakistani Ship Recycling

Dubai-based shipping company Lila Global has made history as the first shipowner to scrap a capesize bulker this year. This marks a significant development in the ship recycling industry, particularly for Pakistan, which is seeing a resurgence in its recycling activity.

The Scrapped Vessel: Wang Hai

  • Type: Capesize bulker (large cargo ship)
  • Weight: 175,000 deadweight tonnes (dwt)
  • Built: 2003
  • Acquired: August 2023 from Chinese shipping giant Cosco (originally named Xin Wang Hai)
  • Sold to: Recycling facility at Gadani, Pakistan
  • Price: $528 per ldt, totaling $12.16 million

Key Points:

  • Lila Global acquired several capesize bulkers from China in late 2023.
  • The Wang Hai was delivered in December 2023 and reportedly made only a few voyages before being sold for scrap.
  • The sale price reflects a slight dip in scrap prices, which had recently risen above $500 per ldt.

Significance of the Sale:

  • This is the first capesize bulker to be scrapped in 2024, potentially signaling a trend of increased scrapping activity in the coming year.
  • The sale highlights the growing importance of Pakistan in the ship recycling industry. After facing credit restrictions for two years, Pakistani recyclers are now actively competing with their Indian and Bangladeshi counterparts.
  • GMS, the company associated with Lila Global, is optimistic about Pakistan’s future in ship recycling, citing the recent International Monetary Fund bailout that eased credit restrictions.

Additional Scrapping Activity:

  • Lila Global also recently scrapped another bulker, the 74,700-dwt Sia (built 1999), in Bangladesh for $502 per ldt.
  • Other reported recycling deals during this period include container ships, an FPSO (Floating Production, Storage and Offloading) vessel, and a naval ro-ro logistics vessel.

Overall, the sale of the Wang Hai by Lila Global marks a notable development in the ship recycling industry. It highlights the increasing competition among ship recycling destinations like Pakistan, Bangladesh, and India, while also potentially indicating a rise in scrapping activity in the year ahead.

Lila Global made history by being the first shipowner this year to scrap a capesize bulker, a large vessel used for transporting bulk cargo like coal or ore. They sold one of several such ships they had purchased from Chinese companies in late 2023. The ship, named Wang Hai and weighing 175,000 deadweight tons (dwt), was built in 2003. Lila Global, which operates from Dubai and is associated with the cash buyer Anil Sharma’s GMS, sold the Wang Hai to a recycling facility in Gadani, Pakistan, for around $12.16 million, or approximately $528 per light displacement ton (ldt).

The Wang Hai, previously known as the Xin Wang Hai under the ownership of the Chinese shipping company Cosco, was bought by Lila Global in August for about $12.8 million. The ship, which was due for a special survey, was delivered to Lila Global in December. It made “one or two” commercial voyages for the company, primarily carrying coal from Indonesia to India. After being anchored off Gadani, awaiting its turn for recycling, the ship finally began the process on Monday.

GMS, in its recent market report, expressed optimism about Pakistan’s ship recycling industry. They highlighted the country’s resurgence in ship recycling activities, attributing it to the easing of credit restrictions following an International Monetary Fund bailout. GMS noted that recyclers in Gadani were now actively bidding for ships and outperforming their counterparts in India and Bangladesh. However, some market sources viewed GMS’ comments as overly optimistic.

Despite differing opinions, recent data showed that Pakistan topped the list in terms of deadweight tonnage (dwt) acquired for recycling. Another bulker, the Qatar Ana weighing 43,700 dwt and owned by Dubai-based Al Khalejia Aggregates, was also reported sold for recycling in Gadani. However, it fetched a lower price of $4 million, or approximately $509 per ldt. This price was lower than what recyclers in Chattogram, Bangladesh, reportedly paid for a similar-sized bulker owned by Chinese company Yangpu Zhehai Shipping.

The competitive pricing in the recycling market hinted at Bangladeshi recyclers increasing their offers to compete with Pakistani counterparts. Just two weeks prior, Bangladesh was offering slightly over $500 per ldt for bulkers. Lila Global had accepted $502 per ldt, or around $6.32 million, for another bulker named Sia, weighing 74,700 dwt and built in 1999. The Sia, acquired by Lila Global in December 2022, was beached for recycling on February 17.

Additional recycling deals reported included feeder-size container ships and other vessels like FPSO Nan Hai Sheng Li, a naval ro-ro logistics vessel named Avatar, among others. These deals reflect the ongoing dynamics in the global ship recycling industry, with shifting prices and competition among recycling yards in different countries.

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