03 January 2012

GMS weekly report on Shipbreaking industry for week 52 of 2011:

As the curtain comes down on what has been a tumultuous final quarter for the global ship recycling industry, many were left looking ahead to 2012, with a fair amount of nerves. As long as the Eurozone crisis remains unresolved and debt, recession, and negativity, remain at the forefront of the global vocabulary, it could be a bit before the markets bounce back.

In India, an atmosphere of fear has pervaded the market in the last quarter, as extreme fluctuations of the Indian Rupee (against the US Dollar) battered ship prices and local sentiment. Consequently, we have seen the single most striking slide in prices since the Fall of 2008. Everyone felt the pinch, from end buyers to cash buyers to ship owners.

Moreover, pain at the shorefront has been almost universal, with vessels waiting weeks on end to beach, as most end buyers were over scrutinizing details to find faults and save some cash.

Yet, there are many reasons to look forward to 2012 with a fair degree of hope. Bangladesh is due to ratify the latest ship recycling code on January 12 that aims to bring safety and responsibility to the sector. Pakistan has shown increasing maturity as a key market with tankers (owing to their gas free for man entry requirement) and have taken their fair share of larger units. Furthermore, there were several occasions during the year when they surged ahead of their Indian counterparts, as opposed to playing second fiddle.

Finally, China has firmly established itself on the international ship-recycling scene, with several big plays this year most notably early in 2011, when they, for the first time ever, led the markets via their prices. Moreover, as increasing capacity and competitive numbers coupled with what many consider to be a green edge, there is no doubt 2012 could be a pivotal year for the Chinese.

In terms of tonnage, dry vessels have led the way following the huge supply of tankers that was forthcoming. With over 65 capsize vessels scrapped for 2011 (falling short of the anticipated 100 mark), it was clear where the focus lay. Yet, this has not outweighed the number of new buildings pouring into the market, and as such, 2012 is expected to be another big year for this sector. With many more candidates on the horizon and ship recycling levels still at a historically decent number, here to another extremely busy 2012.

For week 52 of 2011, GMS demo rankings for the week are as below:

Market Sentiment
Gen Cargo Prices
Tanker Prices
USD 455/lt ldt
USD 485/lt ldt
USD 450/lt ldt
USD 480/lt ldt
USD 425/lt ldt
USD 445/lt ldt

Source: Steel Guru (Sourced from GMS Weekly). 3 January 2012

No comments: