Following the manic close to 2010 and the expected, and traditional, New Year cooling, it was indeed a quieter first week of 2011 on the sales board. Although prices showed few signs of leveling off. Rather, there was a marked firming in levels in the Indian sub continent as cash buyer speculation started to distort the complexion of the market beyond reality.
Capes and decent LDT dry units at 500, Tankers in excess of that, Surely the stuff of fantasy, and so it was at the time of writing, with one capsize being proposed for resale into Alang by one cash buyer receiving a far more rational number of USD 474/LT LDT.
However, with recent high profile and high priced purchases at impossibly high levels and many of them on an as is basis, it seems as though certain cash buyers may be banking on brighter days ahead. This would be flying in the face of traditional wisdom, which has tended to see a cooling in prices around the turning of the New Year after the usual binge on tonnage over the Christmas and New Year period. With Chinese buyers for the most part having fulfilled their state quotas for the year and no longer keen to compete and Bangladesh still barred from buying, it seems to be a straight race between Pakistan and India
What is sure is that whilst steel prices continue to hold up, a sustained buoyancy is bound to follow, but whether the demo market could compete with or even outstrip the second hand market is doubtful. Owners in a position to sell should consider doing so before the inevitable New Year retreat and a return to more sensible price ensues.
For week 2 of 2011, GMS demo rankings for the week are as below:
India ship breaking industry for WEEK 2:
| Country | Market Sentiment | GEN Cargo Prices | TANKER Price |
| India | Cautious | USD 465/lt ldt | USD 4951t ldt |
| Pakistan | Steady | USD 460/lt ldt | USD 490/lt ldt |
| China | Bullish | USD 440/lt ldt | USD 465/lt ldt |
| Bangladesh | Bullish | N/A | N/A |
India powered through into January with few signs of the anticipated New Year cooling yet on the horizon.
A slew of new candidates were brought forward to the market and several older vessels were still under negotiation as the bullish buying from cash buyers continued unabated.
Many owners have started to sense little difference between the second hand market and demo as prices on wet and dry seem to be approaching (and in some cases exceeding) the USD 500/LT LDT mark.
The truth is that steel fundamentals and capacity remain strong, and are expected to remain so for the course of the year, something that has led to impressive sentiment in the Indian sub continent market - with India the chief beneficial"}' due to the sheer number of yards and variety of vessels the end buyers there are able to take.
However, it is worth issuing some caution as owners on several Capesize bulkers under negotiation expect to see figures of USD 500/LT LDT. Recent numbers indicate only USD 474/LT LDT for the resale of a Capesize unit to an end user on today's market. The cash buyer speculation on headier prices to come continues.
The most recent ruling before Christmas in Bangladesh
Furthermore, the future of the 5 to 6 vessels already granted permission to beach is now unclear with the case due to be heard over the coming days.
Certain cash buyers have refused to rule out the possibility of the industry starting up again in the near future it seems with several purchases of large, well positioned units bearing all the hallmarks of Bangladeshi business. However, with agencies overruling one another and appeals, complaints and paperwork flying back and forth, it is no longer clear what the correct lines of communication are in order to maintain / restart an industry that has been the lifeblood of Bangladesh
Source: SteelGuru. (Sourced from GMS Weekly), Tuesday, 11 Jan 2011
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