News / Feeder vessel fetches 'bullish' price as cash buyers bet on scrapping boom

© Kairi Aun

A feeder ship owned by South Korean operator Sinokor has been sold for what was described as a “bullish” scrap price, as cash buyers bet on a revival of ship demolition in Bangladesh.

The 1997-built 1,608 teu Xiumei Shanghai, chartered to Sinokor subsidiary Heung-A Line, was sold for $4.66m.

Major cash buyer Global Marketing Systems noted that the previously subdued Bangladeshi ship recycling market “appears to have renewed its appetite for buying ships”, after demolition yards obtained letters of credit from private, rather than state-controlled banks.

The lack of US dollars in state-controlled banks has impeded the issue of letters of credit to buy ships and, despite discussions about an IMF loan for $2bn to $3bn, recycling yards have been seeking alternate ways to purchase vessels for some time.

Xiumei Shanghai was one of four boxships sold for recycling last week, along with further demolition sales by the Transworld group.

Last week, MSC and Transworld concluded their second ship demolition sales of the year. MSC sold the 1987-built 2,098 teu MSC Giovanna for $5.6m after disposing of the 1986 1,911 teu MSC Floriana two weeks ago. Transworld sold 1998-built 1,584 teu OEL Shravan for $4.34m a month after 1995-built 1,730 teu SOL Delta for the same price.

All the vessels will be recycled in India.

VesselsValue said charter rates for feeder vessels plummeting 64%, year on year, to a January average of $11,579/day was encouraging owners to scrap their oldest and least-efficient vessels.

One broker told The Loadstar: “It no longer makes sense to maintain older ships, especially if they are up for dry-docking and special surveys. Stricter environmental regulations, particularly to reduce vessel CII, will also force out older ships.

“Still, with so many big newbuildings to be delivered, scrapping won’t have a dramatic impact on the supply-demand balance.”