With ship demolition volumes at lows not experienced in a decade, some desperate shipbreakers are taking in shadow vessels, with Clarksons Research noting how an uptick in sanctioned vessels being scrapped in India is exerting some pressure on pricing.
These sanctioned vessels, often acquired at significantly discounted prices due to their opaque legal and operational status, are reportedly being scrapped “under the radar”, Clarksons Research noted in its latest weekly report, going on to discuss how this influx of low-cost tonnage is disrupting market dynamics, depressing sentiment and placing downward pressure on pricing within the sector.
Sanctioned tankers being dismantled in India will often have extended payment terms and measures to hide the owner’s identity.
BRS Shipbrokers noted recently that it’s still difficult for tankers to exit the shadow fleet unless sold to another shadow fleet operator. The challenge lies in the fact that most cash buyers and recycling yards deal in US dollars, exposing them to potential exclusion from the US banking system if the US government chooses to act against such transactions in the future.