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No ships sent to Pakistan since January for recycling

No ships sent to Pakistan since January for recycling
No ships sent to Pakistan since January for recycling

GMS, the world’s largest buyer of old ships, states that no ships have been brought to the shore in Gadani, Pakistan since January. The main reason for this was the Central Bank’s reluctance to provide necessary financial guarantees, especially for larger ships. However, end buyers are expecting few ships in coming days.

However, GMS has now mentioned that a few financial guarantees have been approved and put into action. They believe that as the rainy season comes to an end, the situation might improve.

GMS’s report highlights that the challenges faced by the ship recycling markets in the Indian sub-continent have not improved this week. This has resulted in low market prices due to the lack of ships and financing approvals in countries like Bangladesh and Pakistan.

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Interestingly, India is showing promise despite the tough recycling landscape in 2023. Some significant deals were made this week, suggesting better times might be ahead for this market.

Moving to India, the ship named Gloria 1, built in 1998, could sell for a stable price of $517 per LDT in the current market. This deal is not final yet and might shift to Pakistan or Bangladesh if suitable buyers with financial backing show interest.

There are also other transactions in progress, including the potential sale of two older reefers: the Frio Olympic, constructed in 1988, and the Zefyros Reefer, built in 1990. Both are about 4,700 LDT and could be sold together at $510 per LDT.

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Due to the extremely low prices, some ship owners and buyers are holding onto their unsold tonnage. However, as the rain stops, the industry could see production restart and the backlog of materials at shipyards begin to clear.

The situation in Turkey remains quiet, with no significant movement reported recently.

After a surplus of dry bulk sales during the summer, container ships are now entering the market. This is happening because both the container and bulk carrier sectors are struggling to make substantial profits above operational costs. If prices start to rise from the current lows and financing problems improve in Pakistan and Bangladesh, the industry might experience a busier fourth quarter.

Meanwhile, in Chattogram, eight ships have been beached in the last two weeks. However, the market might remain slow for a while due to the limited number of local buyers with valid financial guarantees. GMS suggests that we’ll have to wait and see when and where business picks up after the rainy season.

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In terms of pricing, Pakistan leads the pack with estimated rates of $540 for containers, $520 for tankers, and $500 for bulk carriers. India and Bangladesh follow with slightly lower rates of $10 and $20 respectively. Turkey’s corresponding estimates are even lower at $320, $310, and $300.

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