In Hellenic Shipping News 21/10/2016
As shipowners are looking to offload more and more container vessels, it seems that their efforts were hampered over the course of the past week. According to the latest weekly report from the leading global cash buyer GMS, “a certain deadlock was reached in the Indian sub-continent markets this week, with a standoff on prices witnessed between over eager cash buyers (who were struggling to onward sell their expensive acquisitions) and end users. It is becoming increasingly inevitable that many of the recent high priced deals will struggle to breakeven basis today’s market levels and as such, owners should not get their hopes up on repeat prices for future tonnage” said GMS.
According to the report however, “there is a spread of tonnage across cash buyer hands and many appear to be stepping into the trap of competing with one another on market vessels and paying over the odds. It may now be a case of who will blink first – in terms of re-committing loss-making sales into local markets – thereby setting a new lower benchmark on prices. Many of the losses sustained on Indian steel plate prices last week made gains this week to see trading even out once again, in what has been a highly volatile sector of late. Moreover, with Diwali holidays on the horizon, it will likely be a quieter period for Indian recyclers as competing markets will invariably step into the limelight and absorb some of the excess tonnage.
A slow supply of dry bulk vessels continues to be drip fed into the market (one more capesize bulker was concluded this week). But it is interesting that certain owners are happy to put their capes through dry dock whilst charter rates remain high and several over aged panamax bulkers have been sold for second hand recently as well”, GMS concluded.
Meanwhile, in a separate report, shipbroker Intermodal said that “last week was a particularly busy one for the demolition market that seems to be lacking a number of drivers at the moment in order for prices to move even higher. Despite the fact that cash buyers still appear hesitant to offer at premiums over last dones though, this seems to be hardly affecting activity, with an impressive number of sales taking place last week as well in the demolition market. We have been stressing out that less and less dry bulk vessels have been heading for scrap since the beginning of the summer and following the steadier course of the freight market during the past couple of months, but the latest sales seem to be signaling a small increase in dry bulk demo activity making everyone wonder whether this is the start of a trend or just a blip. For those owners who have been struggling throughout the year and current freight levels still offer little comfort or hope, current demo prices are definitely a decent window to “exit” especially in light of WBT becoming effective, but a further improving freight market will definitely be a game changer and as such it will affect demo activity way more than demo prices. Average prices this week for wet tonnage were at around 195-305 $/ldt and dry units received about 185-300 $/ldt”, said Intermodal.
Similarly, Allied Shipbroking noted that “despite the improved activity levels having been noted these past couple of weeks, the market seems to be still holding its grounds in terms of prices offered. At the same time we have seen some brave speculators in the market which are even willing to bid at even higher levels in cases of higher spec units and larger units. Despite this for the moment it looks as though it has mainly been the containership sector which has been feeding much of the current appetite amongst breakers. We seen a few Dry bulkers as well, though no considerably lower then the average volume we were witnessing on a weekly basis in the first half of the year. Given this fact and that we are likely to see an increased flow of demo candidates emerge during the final few weeks of the year, the market is likely to witness some downward pressure in terms of pricing, A lot will depend on the trends that will be noted on the commodity front and foreign exchange movements, though if breakers appetite manages to hold or even improve further we may well be looking at similar pricing levels and possibly a fair amount of activity”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide
