According
to the Baltic Exchange, the average scrap prices of bulk carriers delivered in China
have plunged to $450 per LTD, the 3rd consecutive week of decline. These prices
tend to have a positive correlation with the iron ore price, as they both
reflect the supply versus demand of the ferrous market.
The
iron ore spot price in China
began to fall at nearly the same time as the scrap prices. Based on its swap
curves, the iron ore price has likely entered a downtrend channel, which
implies that scrap prices may drop further.
In September of this year, there were 35 bulk carriers scrapped,
amounting to around 2 million deadweight tonnes, lower than the 2.4 million
deadweight tonnes in August.
In
light of the falling demolition prices, owners’ incentives to scrap vessels may
likely be dampened. Combined with the continuously strong pace of new building
deliveries, it is possible that the recovery of the dry bulk freight market in
short term is cloudy.
Source: Hellenic Shipping
News (Sourced from ICAP Shipping). 17 October 2011
No comments:
Post a Comment