In the end, it was simply a matter of holding one’s nerve, refusing to commit locally and weathering the storm caused by the sagging value of the Indian rupee against the US dollar and the dipping prices of steel scrap.
As the Indian currency regained the ground lost in the second fortnight of January, to trade again in the respectable range of INR 61 against the dollar, after briefly touching INR 63, end buyers of scrap ships rushed back to the table seeking to acquire any available vessels on offer.
After a remarkably bullish start to the year, demand had tailed off as end buyers chose to wait and watch market developments before committing on new tonnage. Following the rupee’s recovery, demand surged again for all types of units in both Alang and Mumbai, with local sentiment pushing prices to some previously unthinkable levels.
Clean tankers attracted bids of USD 465 per LDT from India, with marginally lower levels seen from Bangladesh and Pakistan while general cargo vessels were being quoted at USD 430 per LDT in India, USD 425 per LDT in Bangladesh and USD 415 per LDT in Pakistan.
Dubai based cash buyers GMS said that there are plenty of open buyers with yard capacity in the sub-continent barely half full. Almost all types of vessel are in demand with a particular preference, perhaps, for mid sized 7,000 to 14,000 LDT vessels, favoured due to the lower overall cutting time, in light of the constant volatility being seen in all markets.
Nevertheless, no market sales were reported. Despite cash buyers holding onto a number of unsold units, there has not been the substantial supply of tonnage that many had expected from the market in January.
With 16 vessels at anchorage in Chittagong, it has been a busy tide of deliveries and beachings in Bangladesh in the first week of February. Steel prices actually gained ground by as much as USD 10 per LDT wiping out the previous week’s losses in the process.
Source: steel guru. 11 March 2014http://www.steelguru.com/indian_news/Indian_shipbreaking_bounces_back_as_rupee_strengthens/334539.html