It is clear now that the bubble has well and truly burst in the Indian market that has enjoyed a spectacular rally during the first 6 months of the year. With almost constant gains during the first two quarters, many cash buyers seem to have been caught unaware with this most recent setback and some painful times seem destined for those that have overextended themselves.
The Indian Rupee has been threatening the INR 60s mark again over the course of the week (trading mostly into the high INR 59s against the US Dollar), whilst falls in local steel plate prices have seen almost USD 25 per LT LDT wiped away in the space of two weeks alone.
The offering has therefore stalled locally and most end buyers are refusing to offer on new units until some stability has reestablished itself locally.
Not all is lost though as INR 59 is a far healthier level than the disastrous INR 70 that the Indian Rupee touched last year, prompting full on panic in the sub continent scrap markets. Capacity also remains healthy and supply is expected to slow over the summer months (particularly as scrap prices cool off), despite less than impressive freight rates across a number of sectors.
As such, cash buyers leaving very short reply times on their offers with the negative spiral the market has entered and the last thing any buyer and seller wants is to be in a position where they are chasing down the market, with lower numbers being offered by the day.
Notwithstanding, a number of sales are reported to have taken place locally, with the most eye catching perhaps being the reefer BALTIC NOVATOR (6,752 LDT), which saw an extraordinary USD 496 per LT LDT less comms, with 72 T of aluminum responsible for the huge price on show. The MSC Hina (10,655 LDT), having failed previously was reportedly resold for a full USD 10 per LT LDT less this week.
Source: steel guru. 17 June 2014