In Hellenic Shipping News 08/10/2016
As demolition activity over the past few weeks has slowed down, on improving freight market conditions, mainly in the dry bulk segment. However, container scrapping seems to have picked up pace, on the back of the aftermath of Hanjin’s fall from grace. In its latest weekly note, GMS, the world’s biggest buyer of ships headed for demolition noted that “after the glut of container sales concluded last week (7 into India alone), it would potentially be difficult to replicate such a performance the subsequent week, despite the number of candidates that continue to enter the market”.
GMS said this week that “in an amazing display of extreme fluctuation, the week began with some impressive gains as steel plate prices in India firmed up by over USD 10/LDT, only for an end-of-the-week correction to wipe out those gains. This has certainly made it a puzzling and difficult market for cash buyers to call with large variations in price and sentiment witnessed, often across the space of a week alone. The Indian market in particular has been most prone to such dramatic fluctuations of late, motivating many cash buyers to take a punt on high-priced tonnage as a result, which is subsequently leading to many of the lofty prices paid on the market containers sold recently. While Bangladesh has largely steered clear of the action (despite one intriguing and out of character lower LDT bulker sale of the Thor Endeavour from last week) and Pakistan seems unable and indeed unwilling to compete on many of the containers sold into India – at least for now. The encouraging news from last week saw Panama (the world’s largest flag state) and Denmark ratifying the Hong Kong Convention for the Safe and Environmentally Sound Recycling of Ships and it will now be up to those in power to adopt and enforce the convention locally”.
In the Indian market, GMS said that “after seven market sales and improving local sentiments, last week displayed an Indian ship-recycling market on top form. With containers being the vessel of choice for Indian buyers, it would not be surprising to see most of the market sales end up at Alang shores. Keeping the ball rolling from the earlier week, there were a few more sales this week as the comparatively smaller APULIA (12,851 LDT) was sold for a very firm USD 315/LT LDT basis ‘as is’ Hong Kong with 250 Tons of bunkers ROB. Additionally, the sister vessel to the KERSTIN S sold last week and from the same owners, the MICHAELA S (10,550 LDT) fetched a decent USD 308/LT LDT basis ‘as is’ Singapore. While the smaller bulker SEA AMORE (4,375 LDT) with stanchions removed found buyers at a respectable USD 277/LT LDT, the Restis controlled handymax bulker POWER RANGER (8,200 LDT) coming in from the Far East fetched an abnormally and unreasonably high USD 302/LT LDT, basis a full sub-continent range delivery option. In a fine display of local volatility, local steel plate prices climbed by about USD 10/LDT at the start of the week, only to correct themselves by the same amount as the week ended. However, helping steady local levels has been the Indian Rupee, which has been trading at a far more stable figure in the mid Rs. 66s against the U.S. Dollar. It remains to be seen how the market will react in the coming weeks with Diwali holidays approaching and the supply of vessels set to continue”, the company concluded.
In a separate note, Allied Shipbroking said that “the market seems to be holding stable for now at the new high levels reached recently. This has been despite many voicing concerns that the upward shift in price has been too swift and without enough backing from the market fundamentals. It seems however as though buyers are confident in their offerings and given the fact that activity has dropped again this week, these competitive price levels are needed in the market right now in order to entice the few sellers available. It looks as though for the moment its been the containership sector that’s been feeding most of the activity concluded, largely due to the poor freight rate levels noted recently and likely caused by the pressure that has amassed after the failure of Hanjin. Things don’t look so rosy moving forward however and it might be time for sellers to look at these price levels more favorably, it looks as though we could see some price softening towards the end of the year”.
Meanwhile, shipbroker Intermodal noted on the demolition market that “it was all about India last week on the demolition front, as appetite in the country was stronger than ever, with local buyers almost monopolizing any action that took place during the past days. The fact that prices for steel plates in the country kept firming last week, seems to have offered additional confidence to Indian cash buyers, who were not afraid to position themselves at levels above $300/ldt in quite a few sales that have been reported. At the same time, buyers in Pakistan and Bangladesh are nowhere close to displaying such appetite; as a matter of fact there has been a clear aversion to doing much business at such high levels by both countries. In the absence of pressure from any meaningful competition from either Bangladesh or Pakistan, we do except that Indian bids will also ease in the following days, as for now it is apparent that breakers in the country can easily snap most vessels that come up as demo candidates. Average prices this week for wet tonnage were at around 195-305 $/ldt and dry units received about 185-300 $/ldt”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
