AS shipowners seek to renew their fleets with modern fuel-efficient vessels, US-based cash buyer GMS said more than 20 panamax containerships were being offered for scrap, with "more in the pipeline".
With the large number of containerships being touted for demolition, questions are being raised about the capacity of key markets in the Indian subcontinent to absorb so much tonnage over such a short period.
Brokers reported at least six boxships sold over the past week, including some at rates edging close to the US$500 per ldt (light displacement tonne) mark. There was also talk of a seven-ship en bloc deal that, if confirmed, would represent a record single scrap sale in terms of both tonnage and value, reports Lloyd's List.
"A drip-fed supply of vessels would certainly be preferred to the tsunami that is currently enveloping - and some would say killing - the market," said Global Metals Solution (GMS) in its latest market report.
"Several cash buyers that hold the inventory will now be competing among themselves to ensure that none of the vessels are sold cheaply, thereby devaluing their own particular purchases," the GMS report said.
GMS said the yards in India and Bangladesh with capacity and available credit to take on vessels of this size were fast filling up. "Much of the January heat is therefore disappearing from the market, leaving a potential black hole for those cash buyers caught with an array of overpriced and oversized containerships," it added.
Recent deals included Danaos' 1991-built, 23,326 ldt, 4,814-TEU. 60,350 dwt Marathonas, which was reported sold for delivery to India at $495 per ldt, or just over $11.5 million. The rate was pushed up by the vessel's superior Danish build, a 70-tonne bronze propeller and 250 tonnes of bunker fuel on board.
Germany-based ER Schiffahrt was reported to have sold five containerships for delivery to India at $470 per ldt. Hanjin Shipping's 1997-built, 18,989 ldt containership Hanjin Wilmington was reported sold for delivery to India at $460 per ldt or $8.7 million.
"Evidently, the market is being inundated with boxships, with the potential for further units," said London-based Clarkson Research Services. "However, price levels could come under pressure as a limited number of breakers have the financial capacity to acquire such a large volume of high LDT units at once."
Source : HKSG.