August 2014 proved a largely forgettable month for the Indian ship recycling industry, as swings in the value of the rupee and volatility in steel scrap prices made cash buyers turn cautious, but fanned interest in demolition yards across the country’s north-western border.
No sales of junk ships were reported in India, with most end buyers content to sit back and watch market developments before committing themselves to new units. Breakers were firmly on wait-n-watch mode, despite strong fundamentals.
It was only in the closing days of the month that some semblance of stability returned to both currency (the rupee strengthening gradually, to home in on the INR60 per dollar mark) and steel prices. And, since both market demand and capacity remained excellent, it appeared that buyers from Alang would soon return to the table.
“Pakistan remains the overall undisputed king of the moment, paying some incredible prices on all types of vessels, not just their favoured tankers (gas free for man entry only),” remarked Dubai-based cash buyers GMS.
“Despite some fluctuations in the currency (causing a brief stutter in local sentiment) and the ongoing political instability in the region, it was another impressive week in Gadani as the Pakistan market rightfully held on to its top spot for yet another week.”
Bangladeshi buyers displayed none of their normal aggressive mien. The continuous rains have not helped, as large tracts of the country remain underwater, and newbuilding projects therefore remain at a premium.
With local banks tightening the screws on the opening of letters of credit, there are fears that the apathy from Chittagong operators could be indicative of a more serious and long-term malaise in the industry in Bangladesh.
Gadani players sat atop the table, offering $490 per ldt for clean tankers and $460 per ldt for general cargo vessels. Bids from Alang were $5 per ldt lower in both categories, while those from Chittagong were a further $5 per ldt behind.
Of the other countries involved in ship recycling, Turkish buyers could only muster offers of $340-350, while China brought up the rear with bids of $300 for tankers and $280 for dry tonnage.
Supply going into the fourth quarter of this year – traditionally a good time for the industry – is expected to remain steady.
Indian buyers will inevitably have their moment in the sun again, once the red-hot buyers in Pakistan stock their plots and satisfy their rampant appetite. This would be especially so if containership sales for recycling pick up once again – as is currently anticipated.
Source: seatrade-global. 8 September 2014