GMS weekly report on ship breaking industry for WEEK 1, 2011

Plenty of activity over the Christmas and New Year period saw the year end in very much the vein it began. Negotiations on several vessels, particularly large dry units, saw cash buyers speculating on a continued bullishness going into 2011.

This would greatly go against traditional wisdom, which has seen a regular cooling of levels around January time. Chinese buyers have begun to fulfill quotas and the festive binge on available units from owners keen to dispose of their older vessels before year-end has begun to subside.

However, with New Year budgets on the horizon there could be cause for end buyers to stockpile units, even though the past couple of years have seen very little budgetary impact on the import of vessels for scrap. What then has been fueling this fourth quarter surge in prices and demand? Steel prices have been firm across the board and this has been reflected in sentiment and demand from local buyers in each of the major markets.

The absence of Bangladesh from the scene for the best part of 6 months (even though around 20 vessels have managed to beach over that period of time) may have helped to maintain some sense of stability and reality in levels. Traditionally the big buyers for the largest types of vessels and their absence from the competitive bidding process have probably helped to keep a cap on prices. Most buyers in India, Pakistan and China have therefore found themselves in the hunt for most market units without being priced out.

It has been an impressive year then for those three markets in particular, with Pakistan picking up the mantle for the VLCCs and high LDT vessels (as a stand in for Bangladesh), India committing to the best of the rest, reefers and general cargo vessels regularly finding buyers, and China really stepping up when it has mattered this year to secure their fair share of private and market units, often at impressive levels.

Long may it continue into next year! Roll on 2011 and best wishes to all our readers!

For week 1 of 2011, GMS demo rankings for the week are as below:

Country	Market Sentiment	GEN Cargo prices	TANKER Price
India	Cautious	USD 450/lt ldt	USD 4851t ldt
Pakistan	Steady	USD 445/lt ldt	USD 480/lt ldt
China	Bullish	USD 440/lt ldt	USD 465/lt ldt
Bangladesh	Bullish	N/A	N/A

Source: SteelGuru. (Sourced from GMS Weekly), Thursday, 06 Jan 2011

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