24 October 2012

GMS report on shipbreaking industry for WEEK 42 of 2012

With the strike over in Alang, the domination of the Indian market continued for the week with ALL of the market sales heading to Bhavnagar shores (with perhaps a Pakistan option on certain deals, should the market there prove to be competitive enough prior to delivery).

A number of as is Singapore deals have also been done, including another Frontline ex OBO, the FROXT DRIVER (23,500 LDT), but one would imagine that owing to the persistently poor performance of the Bangladesh market, these are all likely to be India candidates. India's improved standing came amidst some concerning slides for the rupee once again. Five days of consecutively poor showings saw the rupee hit a three week low at 54 to the dollar, before improving marginally to finish the week at 53.8.

The turbulent form that the rupee has displayed over the past year has seen ship recyclers losing about 10% of the value of their inventories over the corresponding period. Thus, whenever the currency suffers an alarming and consistent depreciation, memories are evoked of the crisis that began in the fourth quarter of 2011 that eventually saw the currency hit historical, all time lows.

However, Alang buyers have used this current spike to pick up several high priced deals and with little tight displayed from archrivals Bangladesh, most end buyers will see the chance to stock their yards with inventory before the year is out. Whether the market (or indeed the currency) holds is another question entirely. Surely if the supply continues at such a furious pace, it is only a matter of time before plain old demand and supply factors kick in and prices retreat once again.

China was the major market movers for the week securing a 9,000 LDT bulker at USD 455/LT LDT (an improvement of some USD 20 to USD 30/LT LDT from last week). This has finally given owners a choice to make for geographically positioned units something that can only be good for the industry going forward into the last quarter of the year.

For week 42 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 390/lt ldt
USD 420/lt ldt
USD 340/lt ldt
USD 350/lt ldt

Source: Steel Guru. 23 October 2012

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