August 2014 proved a largely forgettable month for the Indian ship
recycling industry, as swings in the value of the rupee and volatility in steel
scrap prices made cash buyers turn cautious, but fanned interest in demolition
yards across the country’s north-western border.
No sales of junk ships were reported in India, with
most end buyers content to sit back and watch market developments before
committing themselves to new units. Breakers were firmly on wait-n-watch mode,
despite strong fundamentals.
It was only in the closing days of the month that
some semblance of stability returned to both currency (the rupee strengthening
gradually, to home in on the INR60 per dollar mark) and steel prices. And,
since both market demand and capacity remained excellent, it appeared that
buyers from Alang would soon return to the table.
“Pakistan remains the overall undisputed king of the
moment, paying some incredible prices on all types of vessels, not just their
favoured tankers (gas free for man entry only),” remarked Dubai-based cash
buyers GMS.
“Despite some fluctuations in the currency (causing a
brief stutter in local sentiment) and the ongoing political instability in the
region, it was another impressive week in Gadani as the Pakistan market
rightfully held on to its top spot for yet another week.”
Bangladeshi buyers displayed none of their normal
aggressive mien. The continuous rains have not helped, as large tracts of the country
remain underwater, and newbuilding projects therefore remain at a premium.
With local banks tightening the screws on the opening
of letters of credit, there are fears that the apathy from Chittagong operators
could be indicative of a more serious and long-term malaise in the industry in
Bangladesh.
Gadani players sat atop the table, offering $490 per
ldt for clean tankers and $460 per ldt for general cargo vessels. Bids from
Alang were $5 per ldt lower in both categories, while those from Chittagong
were a further $5 per ldt behind.
Of the other countries involved in ship recycling,
Turkish buyers could only muster offers of $340-350, while China brought up the
rear with bids of $300 for tankers and $280 for dry tonnage.
Supply going into the fourth quarter of this year –
traditionally a good time for the industry – is expected to remain steady.
Indian buyers will inevitably have their moment in
the sun again, once the red-hot buyers in Pakistan stock their plots and
satisfy their rampant appetite. This would be especially so if containership
sales for recycling pick up once again – as is currently anticipated.
Source: seatrade-global. 8 September 2014
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