Rewind!
This time last year markets sitting perky, aggressive buyers and high prices. What happened next was expected by many but predicted precisely by few. We all saw low 330 levels in june/july.
Yet again the demo world finds itself in midst of a pseudo boom. Prices, especially for containers are crossing the usd 450 mark easily on delivered basis. Bulkers are trading aggressively in Chittagong, which seems to be back overcoming all the financial troubles. China has begun the year with the most aggressive purchases ever recorded in its history.
But lets not get ahead of ourselves, what goes up must come down! All delivery locations despite different financial and economical demographics have one thing in common; “SPACE”. India is running on full, there is a limit to the number of ships a breaker can beach one behind the other. Pakistan is Full, picking and choosing tonnage of choice. By the end of the month, Bangladesh too will be reaching capacity.
Oversupply is still very much evident and will remain a big factor for the entire year. Local steel prices have not moved much and the INR-dollar exchange has not improved.
There are no real factors in the market to sustain such high prices.
Only real factor is competition, its battle royal out there! Many new cashbuyers have to the field and at times only priority being securing tonnage, no matter the price or promise of performance.
Many of the marquee sales over the last week have failed, some owners are waiting for deposit for more than 10 days. Some already in re-negotiation.
This is the nature of business; it is a natural filtration process. Where the strong with grounded core values of delivery and performance will survive.
Source: Star Matrix. 11 January 2013
http://drg.blob.core.windows.net/hellenicshippingnewsbody/pdf/Seasure/SML%20SRR%20WEEK%202.pdf
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