17 November 2011

GMS weekly report on shipbreaking industry for WEEK 45 of 2011:

Ø    Chittagong Impetus needed
Ø    Stagnation sets in
Ø    Wider issues affect market
Ø    Collapse not on cards

Riders of the Storm:

A lot will be resting on Chittagong shoulders when the local market there does eventually reopen in the coming weeks. Inevitably and as anticipated, the case was not heard on November 13th 2011 in Bangladesh, though many had hoped it would have.

Overall, a certain stagnation seems to have set into the industry across the board with nothing able to arrest the alarming slides that have beset the markets for as long as 6 weeks now. Indeed, even a rupee rebound against the US dollar tailed to improve prices and overall sentiment. Rather, many in WC India seem to be focusing on external factors, such as the fall in US scrap steel prices, China's continuing slide in demo levels and the continued absence of their major competitor, Bangladesh, from the bidding desks.

Other wider issues such as the Eurozone debt crisis and the Greek default coupled with international stock market volatility and worldwide recession, all appear to have filtered through to the local recycling markets. While the Cash Buyers have adjusted their offers and numbers accordingly, they have done so without really looking at the relative health of their own industry and the prevailing local scrap steel prices.

Notwithstanding the ongoing deals with Cash Buyers, there are few willing end buyers (especially in India) who are even hesitant to put forward any indications at this stage as genuine concerns on the health of the industry and the direction of prices remains prevalent. Though on macro end, it must not be forgotten that these are still historically strong numbers on the buying front and a 2008 style collapse is not likely to occur.

Meanwhile, though the present continues to yield testing times for cash buyers and owners alike, who have concluded deals in the face of a falling market we do hope that that a return of Bangladesh to compete (in the near future) brings back some sort of stability and (hopefully) an improvement in prices, injecting a much needed boost to the anemic market.

For week 45 of 2011, GMS demo rankings for the week are as below:

Country
Market Sentiment
Gen Cargo Prices
Tanker Prices
Pakistan
Cautious
USD 475/lt ldt
USD 505/lt ldt
India
Weak
USD 470/lt ldt
USD 500/lt ldt
China
Weak
USD 350/lt ldt
USD 375/lt ldt
Bangladesh
Weak
N/A
N/A

Source: Hellenic Shipping News (Sourced from GMS Weekly). 16 November 2011

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