07 September 2011

Golden Destiny SA Weekly Demolition Market Analysis for WEEK 35 of 2011:

Week Ending: 2nd September 2011 (Week 35, Report No: 35/11)

Demolition Market:

In the demolition market, the scrapping momentum remains at a high pace with the oversupply of vessels urging shipowners for more disposals in the future. The top cash buyer Wirana Shipping Corp expects the market to stay buoyant for another four to five years due to the excessive number of newbuildings ordered during the boom and the minimal level of scrapping between 2003 and 2008. In terms of scrap prices there has been a sharp volatility recently in the Indian subcontinent region with levels still hovering at lower levels.

Meanwhile, scrapping activity in Bangladesh has been silent since July with scrap buyers and owners waiting the potential closure of the market on October.

India is now paying $505/ldt for dry/general cargo and $525/ldt for wet cargo, while there is optimism for a spike in levels offered after the end of the Eid holidays and the monsoon season.

Pakistan remains weak due to the levels offered and weak demand from the month of Ramadan and there are expectations for a firmer rebound.

China despite its price gap with the Indian subcontinent region has shown a stability in the levels offered and demand gaining every week more solid position in the ship recycling industry.

Overall Scenario:

  • The week ended with 20 vessels reported to have been headed to the scrap yards of total deadweight 825,859 tons.
  • In terms of the reported number of transactions, the demolition activity has been marked with a slight increase of 11.1% from previous week’s high levels, while there has been also a similar increase in terms of the total deadweight sent for scrap.
  • In terms of scrap rates, the highest scrap rate has been achieved this week for a handy tanker vessel M/T “CARIBIC” of 17,079dwt built 1988 with 6,000tons of lightweight at region $590/ldt in India; however the said vessel contained stainless steel.
  • Bulk carriers continue to be the most popular scrap candidates grasping 45% of the total recorded demolition activity, in contrast with 20% of the interest that the tanker segment attracted.
  • At a similar week in 2010, demolition activity was standing at 55% lower levels, in terms of the reported number of transactions, when 9 vessels had been reported for scrap of total deadweight 309,133 tons with zero reported activity in the bulk carrier segment. India and Pakistan were offering $395 -$400/ldt for dry/general cargo and $430-$435/ldt for wet cargo, while Bangladesh market was inactive.

Source: Hellenic Shipping News (Sourced from Golden Destiny S.A.). 02 September 2011

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