As ship owners are actively pursuing more trading opportunities, the demolition market appears to be slowing down again. In its latest weekly report, the world’s leading cash buyer, GMS, said that “as the tables turned on the rapid momentum that the Indian sub-continent recycling markets witnessed over the recent past, further declines and disappointments came forth as prices continued their downward spiral for yet another week. Given the current trend, a week (perhaps two) of a stable market will be needed before end buyer confidence returns to the point they are willing to offer with any aggression, as local steel plate prices have been fluctuating wildly and by as much as USD 10/LDT nearly everyday”.
GMS added that “despite that, there were a number of sales concluded this week (some at numbers belying the inherent market weakness) as cash buyers see it fit to continue offering with some of the inexplicable speculation that has characterized the market for much of this year. On the surface at least, steel plate prices have declined by at least UD 10/LDT across all subcontinent locations and this has troubled end users to the point of distraction, with many choosing not to even offer at all, at least until some gains (or even stability) are witnessed in the market. As the monsoon season, advent of the month of Ramadan and budgets (in Pakistan and Bangladesh) are collectively looming towards the end of May, a strong preference to import ships over the next month is still prevalent, albeit at the readjusted / lower levels, which are still very good when compared to those from the corresponding period last year. For this reason, coupled with a slowing of supply, it may not be time to hit the panic button just yet. Given that a number of larger LDT vessels remain unsold and in cash buyer hands, many are hoping that this recent decline is nothing more than a blip and prices may recover to previous levels, at least ahead of the anticipated summer slowdown”, GMS noted.
Meanwhile, according to Allied Shipbroking, “despite the drop that had been noted these past weeks in local steel prices, the intense competition amongst breakers seemed to have pushed offered price levels further this past week. Indian breakers pushed up their game this week, increasing their offers and intensifying the competition in the market. The pre-monsoon season has now pushed many breakers to really push for securing any available candidates that come to market. Given that we are still facing a situation where by the number of demo candidates continue to be few in number, this has helped keep things buoyant on the price front. At the same time however, it also appears that a number of recent purchases are highly speculative and as such carry with them a considerable risk in the case that the market collapses further. For the time being it seems as though current levels can be supported despite being on the limit of what local steel prices and exchange rates in the Indian Sub-Continent can support right now”, the shipbroker said.
In a separate weekly note, Clarkson Platou Hellas said that “it appears that the correction that many have been predicting is now occurring with reports that locally in the Indian subcontinent, price levels are off this week by some USD 10-15/ldt. This has come off the back of the price of iron ore hitting a six-month low causing concern of a fall in Chinese steel prices after the country’s steel mills ramping up production, together with local domestic steel prices suffering some drop. The correlation between the Iron price and the $/ldt for ships often follows a similar pattern and Cash Buyers with tonnage in hand will be hoping that there are no further falls as many, reportedly, are already struggling to resell their various units. These are interesting times at present as the situation shows some confliction. There remains a lack of tonnage yet price levels are weakening. When was the last time this occurred? The resultant feeling is that the current negative trend is a temporary blip as premonsoon delivered tonnage may attract more positive discussions again, but as of now, any Owner wishing to see a USD 400/ldt plus number may be waiting indefinitely”, the shipbroker concluded.
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Source: GMS
