The ongoing limited supply of vessels for recycling in the Med region has resulted in a lack of supply that is driving the tonnage starved market, further up this week. It is evident that end buyers in Aliaga are keen to purchase just about any unit offered into the local market as domestic yards are barely able to cover their operating expenses.
Consequently, even small LDT vessels might achieve levels in the region of USD 330 to USD 340 per LT LDT, depending on the type of the vessel. A few weeks back, such levels were only being offered to units with extra value.
It is estimated that last year, about 1 million LDT was delivered to Turkey, which is equivalent to about 20,000 LDT per week, or about 4 units of 5,000 LDT per week. In comparison, so far in 2014, the total number of units to have hit the shores of Aliaga are estimated to be in the 50s, which translates to only about 2-3 units per week.
As such, end buyers hope that, for the second half of the year, the negative fluctuation of chartering rates (especially for the smaller units that trade in the Med region) will have a positive effect in the supply of tonnage and, as such, more units being delivered to local ship recycling facilities.
Other factors, which are affecting the pricing, ie local steel prices and the currency, improved slightly this week. Nevertheless, it is still under question whether the present market levels in Aliaga would allow local buyers to successfully compete with the Indian sub continent markets or whether a further boost in the prices would be needed.
Source: steel guru. 27 May 2013