04 May 2014

Bumper ship demolition sales despite uncertainty:

It is becoming more and more difficult to predict the manner in which shipbreaking markets will behave.

At a time when caution could have been expected to be the watchword, there was rampant buying at rates that can only be considered unsustainable.

In India, uncertainty over the direction of the general elections, a steady slide in prices of steelplate, to the extent of $10-15 per ldt during the month of April, and the imminent start of the monsoon season were factors that should have adversely affected buying, but did not.

In Pakistan and Bangladesh, there would have been worry over the possibility of unfavourable policies being introduced in the national budgets, scheduled to be announced in the first week of June.

Ship recyclers were razor-keen to stock their yards with pre-budget vessels, particularly after the market was abuzz with news that a number of VLCCs were being earmarked for the ship cemeteries.

Pakistani operators tried putting their hands into this segment, but with their counterparts from Chittagong with deeper pockets being vigilant in keeping their fingers on the market pulse, the Gadani breakers had to be content with a slew of aframax tankers they have successfully negotiated in recent weeks.

“The overall – pre-budget, elections and monsoon – buying ramped into overdrive, particularly in India, as some truly speculative and bullish prices beset the market,” remarked Dubai-based cash buyers GMS.

“There were even whispers of one or two VLCCs being concluded on ‘as is Singapore’ basis at some big numbers approaching $20m, with bunkers for the onward voyage, although gas-free status at this moment remains unclear, so a Pakistan or Bangladesh delivery is uncertain.”

Bullish Indian cash buyers were bidding as high as $480 per ldt for clean tankers and $450 per ldt for general cargo vessels, remaining at least $5 per ldt ahead of corresponding offers from Bangladesh, and a minimum of $10 per ldt ahead of Pakistan in both segments.

The pick of this week’s sales was that of the Danaos controlled 23,366 ldt Mytilini for an astounding $509 per ldt. It was the fourth vessel sold to Alang this year by the Hamburg based shipowner.

Singapore’s Pacific International Lines got rid of their 6,811 ldt container vessel Kota Wirawan for a mind-boggling $513 per ldt. Market men felt that the decent age, ownership and size of the ship had attracted many end- buyers, and was responsible for the massive price.

The Polish controlled 1991-built, 13,575 ldt Danish panamax bulk carrier Armia Krajowa sold at an impressive $480 per ldt, with 280 tonnes of bunkers on board.

Italian owners committed both their ro-ro sister ships (both 13,696 ldt) Jolly Verde and Jolly Rosso on ‘as is Jebel Ali’ basis, for a very firm $500 per ldt en bloc, with extra payment for bunkers.

Despite these bumper sales in the last week of April, there is an overall concern locally that the market has peaked in anticipation of the impending monsoon season and the announcement of the election outcome.

It appears highly unlikely that the current high levels can be sustained, as prices generally dip during the monsoon due to unfavourable beaching tides, along with the seasonal migration of workers away from yards and back to their home towns.

Source: sea trade global. 2 May 2014

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