With the dry bulk market on recovery mode, ship recycling yards and cash buyers are scrambling to attract more deals. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “there certainly appears to be some division between what some of the cash buyers are offering and the resale levels from the actual recyclers. The recent increase in rates has been maintained this week resulting in a very interesting sale. The VLCC “Plata Glory”, 38,361 ldt achieved a credible USD 438.00 per ldt basis delivery full range Indian sub. Continent, gasfree for hotworks. This is certainly a firm rate as this week, some industry players were talking the market down, and with the delivery scheduled in January, the sale could be an expensive risk if the current levels do not hold into the New Year. As aforementioned, some slight caution crept into the market this week, most likely on the back of the currency devaluation last week in Pakistan and confidence seemed to have been affected, however there remains a distinct lack of tonnage which should stabilise any possible negative corrections”, said the shipbroker.
In a separate note, Allied Shipbroking noted that “the ship recycling market continued to be in a relative slumber this past week with a limited number of deals being reported. Despite this, this limited volume was still a considerable improvement compared to what we were seeing the week prior, possibly indicating a slight increase in appetite that may well be merging amongst breakers. This increased appetite though may well be rather selective in nature from the buyer’s side, with a clear preference being shown both in terms of pricing and activity. From the main breaking nations, the Indian Sub-Continent continues to show a more bullish face compared to the rest of the regions, with Indian buyers seemingly ‘hungrier’ for the time being, gathering as many candidates as possible. Given that there seems to be an increased interest in high spec units and there seems to be a lack in speculative buying, there may well be an indication of some downward price correction in sight. On the whole, this slowdown in activity of late shouldn’t be considered too troubling, with the New Year holidays having surely played a role”, said Allied.
Meanwhile, GMS, the world’s leading cash buyer said this week that “this week, the general shortage of supply finally resulted in some of the previously exorbitant Cash Buyer purchases being onward committed to end Buyers, at levels comfortably in excess of breakeven, as a number of resales were reportedly confirmed at increasingly firmer prices. The primary focus of the industry has remained the soaring Indian market where even a number of decent LDT tankers have been diverted from a far-too hesitant Bangladesh. While a healthy majority of this week’s fixtures were reportedly concluded during the early part of the week, concerning news towards the end of the week saw declining local steel plate prices in India and the Pakistani Rupee depreciating even further, gradually approaching PKR 110 against the U.S. Dollar.
As such, an increasing number of Pakistani recyclers are now refraining from offering on market tonnage, nervous as to when the current situation will resolve itself. The prognosis is that the Pakistani government is set to inject cash into the market to improve liquidity in the coming weeks, in an attempt to alleviate (what is seen by many as) a temporary crisis. Notwithstanding, as Pakistani levels now dither, end Buyers are seeing this as the perfect opportunity to exploit the current situation and lowball on available tonnage, in the hopes of securing a cheap vessel (or two). This has subsequently seen some of the recent Capesize bulker supply from the Korean market stall a touch as Owners look towards competing bullish markets. To date, about 8 capes coming off Korean government charters have been sold over the last few months, which is surprising given that (dry) charter rates continue to push on at impressive numbers! As markets stand firmer by about 50% when compared to the corresponding period last year, it has been a stunning rally from the high USD USD 200s/LDT to well above USD 400/LDT this year, as the ship recycling industry finally starts to roar again”, GMS concluded.
Source: hellenic shipping news. 21 December 2017