16 October 2012

GMS report on shipbreaking industry for WEEK 41 of 2012:

With Bangladesh staying marginalized, buyers in India and Pakistan seized their moment to forge ahead and conclude their pick of the market tonnage. Some vessels were concluded with a more speculative slant from cash buyers, particularly those as is units done at higher levels this week, while others were representative of an improving market reality that has seen prices pick up markedly over the previous weeks.

The one note of caution remains a Rupee that has started to weaken once again in India and a local strike that has seen one ship recycler arrested following an explosion at his yard the previous week. The strike is occurring all over the ship recycling sector, in retaliation to the heavy handed tactics that local authorities have used in reprimanding the concerned buyer, it is something that may even continue into the coming week, stalling activity somewhat.

With that in mind, Pakistan saw the chance to take advantage and local Gadani buyers have been bidding aggressively on cash buyer tonnage recently, securing one or two high priced and high profile units, mostly in the larger LDT category.

Bangladesh of course has continued to struggle on price and capacity since the summer binge on units that saw them reach capacity in most yards. Those buyers that do remain have been struggling to open LCs and cannot be relied upon to take smooth and timely deliveries of arriving vessels. Indeed, it is in times like these that a strong cash buyer presence is required, not only in dealing with unreliable end buyers who look for any way to renegotiate the agreed price, but also in not buckling to some of the absurd numbers being quoted on the unsold vessels waiting outside Chittagong. We have seen much of the tonnage subsequently diverted to WC India Pakistan shores of late.

China reemerged from the holidays full of bold intentions to get back to the buying but with little in the way of substance to back it up. The fact remains that the market is so far behind their sub continent rivals and a dampening demand for scrap steel along with depreciated prices indicates that very few vessels are likely to be sold there in the coming weeks. The same situation is true of Turkey at present.

For week 41 of 2012, GMS demo rankings for the week are as below:

Market Sentiment
USD 440/lt ldt
USD 405/lt ldt
USD 435/lt ldt
USD 380/lt ldt
USD410/lt ldt
USD 300/lt ldt
USD 320/lt ldt

Source: Steel Guru. 16 October 2012

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