18 December 2013

GMS weekly report on ship breaking industry for WEEK 50 of 2013:

Interestingly this week, strikes in both India and Bangladesh saw cash buyer (and end buyer) speculation re-enter the market once again. The political unrest in Bangladesh and the truckers strike in India have led certain parties to start gambling on an increase in commodity prices, something that usually seems to occur in times of crisis.

Currencies in both Pakistan and India also began to settle (though daily variations continue to leave end buyer nerves frayed to an extent) and appeared to present an overall rosier picture in the Indian sub-continent recycling markets this week.

A glut of heavy LDT container vessels was also concluded into India this week as this particular sector displayed few signs of satisfying owners on the hire rates. The winter period however, has brought with it, an improvement in rates for many other types of vessels something that may see supply slow going into the New Year.

The Chinese government announced this week, the much-anticipated subsidies due to owners of Chinese flagged ships who have scrapped locally this year. The generous premiums will see mostly the largest state run benefactors obtain prices well above what they may have even seen, had they scrapped their vessels in the sub-continent.

This is a significant development and may explain why Chinese yards have been so subdued for the last few quarters of this year. Local yards have seen a steady and decent supply of vessels from the likes of Cosco and China Shipping, which has led to a reduced appetite / overall capacity. There is also a general lack of interest to compete on some of the costlier international tonnage, particularly when cash buyers often look at buying ‘as is where is’ for a final voyage across to the sub-continent.

Source: steel guru. 17 December 2013

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