Golden Destiny: WEEKLY DEMOLITION MARKET REPORT of WEEK 30 of 2012

Week Ending: 27th July 2012 (Week 30, Report No: 29/12)

In the demolition market, the potential closure of Indian ship recycling industry and the drop in steel prices keeps the scrap price momentum at low levels with some signs of recovery, while currency in India is again loosing ground against dollar. 

Offered prices are now around at $370-$380/ldt for dry/general and $400/ldt wet cargo in the Indian subcontinent region, while China offers levels below $350/ldt for dry/general and about $350/ldt for wet cargo. 

India keeps winning some demo sales for its scrap yards given the uncertainty of the pending Supreme Court ruling in the coming days for banning vessels entering Alang unless any hazardous or toxic wastes had been removed. The court is due to rule on Monday whether the 214,000dwt M/V “ORIENTAL NICETY” (ex-Exxon Valdex) built 1986 would be allowed for disposal in Alang. There are hopes that the Indian shiprecycling industry will remain open and will not face long term closures as Bangladesh with potential stricter regulations imposed.

The week ended with 19 vessels reported to have been headed to the scrap yards of total deadweight 739,621 tons. 

In terms of the reported number of transactions, the demolition activity is down by 10% from previous week’s business with 70% lower dry bulk carrier disposals, while In terms of total deadweight sent for scrap, there has been a decline of 49%, while tankers are holding the lion share, 32% of the total demolition transactions. 

India is on the frontline by winning 9 of the 17 total demolition transactions. In terms of scrap price levels, notable demo deals in the wet and container markets for vessels disposals at levels $422/ldt including bunkers.

At a similar week in 2011, demolition activity was 37% lower than today’s levels, in terms of the reported number of transactions, when 12 vessels had been reported for scrap of total deadweight 557,302 tons with bulk carriers 66% of the total number of vessels sent for disposal. Scrap prices were floating at stronger levels with India offering $525/ldt for dry and $550/ldt for wet cargo, while Bangladesh market was inactive.

Source: GDSA (www.goldendestiny.com). 27 July 2012

http://hiweb.blob.core.windows.net/hellenicshippingnewsbody/pdf/Seasure/wk%2030.pdf

Ship owners are expected to hasten the scrapping of older vessels:

As long as freight rates are plummeting and oversupply issues are on the forefront, ship owners are expected to hasten the scrapping of older vessels, in order to make room for the new ones, which currently are flooding the market. In an indication of the dreadful state of the dry bulk market in particular, yesterday, the BDI (Baltic Dry Index) reached another record low, ending at just 651 points, down by 1.66% on the day. 

In its recent report, Golden Destiny (GDSA) said that “in the demolition market, the volume of demolition transactions has shown strong signs during the first month of the year with appetite for large sized vessel unit disposals. The Bangladesh shiprecycling industry has fully opened, but the activity is very light due to the ongoing tax issue that the Bangladesh Shipbreaking Association tries to resolve. Scrap prices for dry and wet units have started to follow an upward revision with China closing neared with the rates offered in the Indian Subcontinent region” said the Pireaus-based shipbroker. 

It went to mention that “levels for dry and wet units have started to exceed $500/ldt, with signs for further vessel disposals as rates keep firm and freight earnings do not support the trading of vintage tonnage. Notable demolition deals in the crude tanker market the disposal of suezmax tankers underlining the dark outlook of this segment with hopes for similar units to follow as a remedy to the oversupply. 

The week ended with 15 vessels reported to have been headed to the scrap yards of total deadweight 988,345 tons. In terms of the reported number of transactions, the demolition activity has been marked with a 12% week-on-week decline, due to 57% and 25% lower volume of demolition transactions in the bulk carrier and liner segment respectively, whereas there has been a 2.1% decline regarding the total deadweight sent for scrap. 

In terms of scrap rates, the highest scrap rates have been achieved this week in the crude tanker segment by Bangladesh and Pakistan for suezmax units at $510/ldt. Tankers have grasped the lion share of this week’s total demotion activity, 33%, with India being on the frontline. 

At a similar week in 2011, demolition activity was down by 20% from the current levels, in terms of the reported number of transactions, 12 vessels had been reported for scrap of total deadweight 710,976 tons with bulk carriers grasping 50% of the total number of vessels sent for disposal. 

India and Pakistan had been offering $465-$475/ldt for dry and $500/ldt for wet cargo, while Bangladesh market had been inactive from the demolition scene” concluded Golden Destiny.

In a separate report, Clarkson Hellas mentioned that “despite the Far Eastern focus on their New Year festivities this week, the market maintained its recent busy schedule, although the sales reported were definitely down from last week. Whilst Bangladesh is open for business, rates on offer are lower than their counterparts from India and few units are being positioned for delivery to Chittagong. Many parties may still be apprehensive selling to this area until such a time, several beaching tides come and go and deliveries/subsequent beachings are completed without any delay or hindrance. 

Indian breakers continue to lead the way in respect of pricings and activity. Rates firmed further this week as the breakers saw steel prices and the currency market maintain its recent steady/positive impetus creating a ‘feel good’ factor internally and thus, the improved sentiment from the waterfront lead to some significant increases in their price indications. All eyes will now fall on China to see how the markets open after their New Year holidays. If they continue in the same vein as they were prior to the holidays, then we could finally see a healthy market with attractive rates from all the major breaking destinations.

Finally, Shiptrade Services also said that “Bangaldeshi market is open but buyers offer levels below those of the rest of the subcontinent. India continues to offer firm levels, and some say extremely optimistic. Pakistan moved at the same pace with buyers offering extremely firm levels. China had holidays and as such, this week was quiet for this market” it concluded.

Source: Hellenic Shipping News Worldwide. Nikos Roussanoglou. 3 February 2012

http://www.hellenicshippingnews.com/News.aspx?ElementId=b93edf57-933c-44f6-9ebc-d3da6d1479e9

GDSA Weekly Ship Demolition Market Analysis for WEEK 43 of 2011:

Week Ending: 27th October 2011 (Week 43, Report No: 43/11)

Source: Hellenic Shipping News (Sourced from www.gdsa.gr). 27 October 2011

http://download.hellenicshippingnews.com/pdf/wk43.pdf

GDSA Weekly Ship Demolition Market Analysis for WEEK 42 of 2011:

Week Ending: 21st October 2011 (Week 42, Report No: 42/11)

The week ended with intense newbuilding business, fairly firm secondhand ship purchasing activity and scrapping momentum hovering at lower weekly transactions, while the highest activity has been recorded in the newbuilding market.

Overall, the secondhand ship purchasing activity is down by 58.3% in comparison with the ordering momentum, while the demolition activity is 77% down from the total number of orders reported and down by 46% from the secondhand ship purchasing activity.

The week closed with 23 transactions reported worldwide in the secondhand and demolition market, down by 52% from previous week and 25.8% from a similar week in 2010, when 31 transactions had been reported and secondhand ship purchasing activity was 20% lower than the ordering business.

Demolition Market

In the demolition market, the scrapping business has slowed down in the last month with demo countries offering levels below $500/ldt for dry/general and excess $500/ldt for wet cargo.

Bangladesh - The granting of official extension of ship-recycling industry is pending.

Pakistan - succeeded no deals this week, even though it has narrowed the price gap with the Indian subcontinent region.

China - scrap buyers won two demo deals after their return from National holidays by offering $430/ldt for dry and $450/ldt for wet cargo.

India - remains the key demo player.

In the wet market, scrap levels offered by Alang buyers are still very competitive for some units in excellent condition. 

Total delivered: The week ended with 8 vessels reported to have been headed to the scrap yards of total deadweight 249,561 tons.

Week-on-week comparison: In terms of the reported number of transactions, the demolition activity has been marked with a 43% week-on-week decline and regarding the total deadweight sent for scrap there has been a 71% decrease. The dropdown of scrapping business is due to a 20% and 60% lower momentum for bulk carrier and tankers disposals respectively.

Scrap rate: the highest scrap came to light this week in the tanker sector by India for a tanker of 16,420 dwt “CHINA SPIRIT” with 6,220/ldt at $580/ldt, the price is said to be based on saleable machinery and the country built of the vessel.

Market leader: India remains in the first rankings by attracting 50% of the total demolition activity.

At similar week in 2010: Demolition activity was up by 37.5% from the current levels, in terms of the reported number of transactions, 11 vessels had been reported for scrap of total deadweight 443,712 tons with scrapping activity in the bulk carrier and tanker segment being subdued, 5 scrapped units in total. India and Pakistan had been offering $410-420/ldt for dry and $440$450/ldt for wet cargo, while Bangladesh market had been inactive from the demolition scene.

Source: Hellenic Shipping News (Sourced from www.gdsa.gr). 21 October 2011

http://download.hellenicshippingnews.com/pdf/wk43.pdf

GDSA Weekly Demolition Market Analysis For WEEK 41 of 2011:

Week Ending: 14th October 2011 (Week 41, Report No: 41/11)

The week ended with the highest level of activity being recorded in the secondhand market, lower levels of newbuilding activity and firmer volume of demolition transactions.

Overall, the secondhand ship purchasing activity is up by 113% in comparison with the ordering momentum, while the demolition activity is 12.5% down from the total number of orders reported and down by 58.8% from the secondhand ship purchasing activity.

The week closed with 48 transactions reported worldwide in the secondhand and demolition market, up by 17% from previous week and up by 26.3% from a similar week in 2010, when 38 transactions had been reported and secondhand ship purchasing activity was 82% higher than the ordering business.

Demolition Market:

In the demolition market, a firmer volume of scrapping activity came to light from last weeks’ weak levels.

The downward revision of scrap prices for the dry/general cargo continues for a second consecutive week with India and Bangladesh paying $495/ldt, China $430/ldt and Pakistan being one breath from the Indian subcontinent region by offering $490/ldt.

Some deals have been emerged the last days in the Bangladesh market, but there is still no official extension of the last market’s deadline on October 12th.

In the meantime, Bangladesh has announced its plans for the creation of a “Ship Building / Ship Recycling Board” service under the Ministry of Industries that will be responsible for monitoring the import of ships of recycling in Bangladesh.

In the wet market, scrap levels keep their pace with India and Bangladesh paying $525/ldt. Pakistan seems to have regained its power by picking up again wet units, while in China business has slowed down due to the National October holidays underway.

The week ended with 14 vessels reported to have been headed to the scrap yards of total deadweight 874,228 tons.

In terms of the reported number of transactions, the demolition activity has been marked with a 40% week-on-week increase and regarding the total deadweight sent for scrap there has been a 190% increase.

In terms of scrap rates, the highest scrap rate has been achieved this week in the tanker sector by Pakistan for a tanker of 91,717 dwt “NOSTOS” with 13,592/ldt at $540/ldt, while in the dry sector India has paid $540/ldt for a container of 40,379 dwt “MSC AURELIE”.

India and Pakistan have attracted 57% of the total demolition activity.

At a similar week in 2010, demolition activity was down by 50% from the current levels, in terms of the reported number of transactions, 7 vessels had been reported for scrap of total deadweight 36,623 tons with no scrapping activity in the bulk carrier and tanker segment, with India and Pakistan offering $435-410/ldt for dry and $465-%440/ldt for wet cargo.

Source: Hellenic Shipping News (Sourced from Golden Destiny SA)

http://download.hellenicshippingnews.com/pdf/golden/wk41%20WEEKLY%20S&P%20SECONDHAND_DEMOLITION_NEWBUILDING%20ANALYSIS.pdf

http://download.hellenicshippingnews.com/pdf/golden/wk41.pdf

GDSA Weekly Ship Demolition Market Analysis for WEEK 40 of 2011:

Week Ending: 7th October 2011 (Week 40, Report No: 40/11)

The week ended with the highest level of activity being recorded in the newbuilding market, firm secondhand ship purchasing activity and lower pace of demolition transactions The week closed with 41 transactions reported worldwide in the secondhand and demolition market, posting a 13.8% increase from a similar week in 2010 when 36 transactions had been reported and secondhand ship purchasing activity was 44.8% lower than the ordering business.

Demolition Market:

In the demolition market, the downward revision of scrap prices offered by India for dry cargo and the upcoming uncertainty for the extension of new deadline in Bangladesh market will be the two main factors that are going to influence the firm scrapping activity seen in September. Market sources suggest that some cash buyers are now trying to renegotiate highly priced deals achieved at levels lower than $500/ldt.

Bangladesh and India are now paying $500/ldt for dry/general cargo and $525/ldt for wet cargo.

Pakistan - seems to be more aggressive in new deals by grasping this week a tanker of 8,774ldt for $520/ldt asis Colombo, including bunkers.

China: In China, scrap prices have fallen by $10/ldt more with dry/general cargo units seeing levels of $430/ldt and wet $450/ldt, while cash buyers are finding difficulties in persuading sellers to position their units for disposal in their scrap yards. Market sources suggest that a bulker M/V “LUCKY OCEAN” of 22,225dwt with 5,437ldt committed last week at $450/ldt in China is again on the market for sale with end buyers willing to take the unit at prices now below $430/ldt.

Total delivered: The week ended with 10 vessels reported to have been headed to the scrap yards of total deadweight 301,395 tons with some deals concluded some time ago.

Week-on-week comparison: In terms of the reported number of transactions, the demolition activity has been marked with a 44.4% week-on-week decline, due to 78% weekly decline of scrapping business in the bulk carrier segment.

In terms of the total deadweight sent for scrap there has been a 72% decline.

Scrap rates: The highest scrap rate has been achieved this week in the tanker sector by India for a tanker of 68,159 dwt “LOUKA” with 16,248/ldt at $540/ldt, which implies stronger levels for wet tonnage in the Indian subcontinent region.

Market leader: India attracted 60% of the total demolition activity with Bangladesh trying to win some new deals before the end of its extension.

Similar week in 2010: demolition activity was down by 10% than the current levels, in terms of the reported number of transactions, 9 vessels had been reported for scrap of total deadweight 264,273 tons with three bulk carriers being scrapped and India offering the highest levels $435/ldt for dry and $465/ldt for wet cargo.

Source: Hellenic Shipping News (Sourced from www.gdsa.gr). 8 October 2011

http://download.hellenicshippingnews.com/pdf/golden/wk40%20WEEKLY%20S&P%20SECONDHAND_DEMOLITION_NEWBUILDING%20ANALYSIS.pdf

http://download.hellenicshippingnews.com/pdf/golden/wk40.pdf