The turmoil across the board in the international ship recycling markets showed few signs of easing the past couple of weeks, despite the announcements of both, the Pakistan and Bangladeshi budgets, that many had been pegging their hopes on for some kind of revival.
In fact, both budgets came through largely neutral (slightly positive in Bangladesh) for end buyers. Yet, a combination of ailing economies and signs of slowdown in both competing locations i.e. China and India has helped slide prices more than USD 100 per LT LDT since the highs of the first quarter of 2012.
Indeed it has been quite some time since we have seen markets in the Indian sub continent slip below the USD 400 per LT LDT mark, but all recycling markets are regularly quoting levels of high 300s per LT LDT on reefers and dry vessels. Only tankers and containers (in India Bangladesh) are just about keeping their heads above the high LTSD 400 per tonne mark.
With the monsoon season now firmly upon us, bringing with it, the seasonal migration of labor slowdown of recycling activities, resulting in an expected reduction in buying that is not completely new to those in the industry. Yet, it is the ferocity and rate of the slide that has taken many by surprise.
In today's market, it is a feat in itself to locate an end buyer with any sort of number emanating from their end as most are content to wait and watch out this current storm before committing to new units. Overall, in most markets, end buyers remain satisfied with tonnage following the veritable binges of the recent past.
The stockpiling of unsold scrap steel at ship recyclers yards is a worrying development though, with perhaps concerns in both, the Chinese and Indian national economies, contributing to the continued slowdown. Until this starts shifting again, it may be some time before we see a return to fully functioning form for all major markets.
Source: Steel Guru (Sourced from GMS Weekly). 12 June 2012