GMS weekly report on shipbreaking industry for WEEK 44 of 2011:

RETREAT OR RESILIENCE?!

The doom merchants have been out in force for the past few weeks, forecasting the end of the world as we know it, and the most unprecedented fall in international recycling prices since the crisis of 2008 which saw 100s/LT LDT knocked off prices in a matter of weeks.

The falls this time around have not been quite so dramatic. The late summer surge in prices now has receded somewhat to more realistic levels, but this can hardly be labeled a crisis. In fact, prices are still at historically strong levels. Even newcomers to the industry harbor fresh memories of the 200s to 300s/LT LDT that were on offer for much of 2008-2009, as the world attempted to get back on its feet once again.

The overriding concern seems to be a lack of confidence in all major markets. Perhaps fearing a 2008 repeat, many end buyers have simply closed up shop, refusing to talk even on new candidates. As levels have tumbled by the day, so have local buyers retreated, and become unreachable and non committal in a few cases.

Steel prices have remained relatively steady (though a small drop reared its head up mid week) and the rupee also recovered (marginally) against the US Dollar this week, so the major fundamentals remain in place for the most part. It would seem therefore that wider concerns - the Eurozone and US debt crises coupled with the volatility of international stock markets - are infiltrating market sentiment and creating the fear that further challenging times may lie ahead.

Talk of some sort of paradigm shift may appear fanciful at this stage though as the buying continued (admittedly at lower levels) on all types of unit across the board. There may be some muted demand but the business, as always continues.

Where prices are likely to settle is still a matter of debate at this stage many are expecting (and indeed hoping) for a post-Eid pick up once Pakistan and hopefully Bangladesh (depending on the court order) re-appear at the bidding tables.

For week 44 of 2011, GMS demo rankings for the week are as below:

Country	Market Sentiment	Gen Cargo Prices	Tanker Prices
Pakistan	Cautious	USD480/ltldt	USD510/ltldt
India	Weak	USD470/ltldt	USD500/ltldt
China	Weak	USD380/ltldt	USD390/ltldt
Bangladesh	Weak	N/A	N/A

Source: (Sourced from GMS Weekly). 9 November 2011

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