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GMS Market Commentary on Shipbreaking in Week 11 - FINELY POISED!

Steel News - Published on Mon, 18 Mar 2019

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Markets remained under pressure this week, with very little change reported that could affect the status quo. As Bangladesh continues to fill up and gradually run out of keen & capable end Buyers, India continues to suffer extreme volatility in local plate prices and Pakistan rounds off the sub-continent markets while it rests out of the reckoning. Surprisingly, despite everything going on that would suggest that the sub-continent markets are entering a dull and vegetative state, several fixtures over the last couple of weeks make it seem as though we may be finely poised for an upwards surge (unless a sharp decline crushes all of the seeming optimism from various Cash Buyers).

Indeed, several large LDT, speculative-level sales have been concluded since the week of TradeWind’s conference in Hong Kong, as industry players convened to discuss all matters ship recycling related. Yet, the reported levels from recent sales certainly do not reflect today’s reality on the ground, with prices yet to jump in order to satisfy the excessive and seemingly unattainable breakeven levels of these fixtures.

On the flip side, local fundamentals seem to suggest that prices are more likely to arrow down in the short term, with cheap steel imports from Iran and elsewhere affecting Pakistan and steel plate prices remaining perilously volatile in India. As a result, Bangladesh has seen most of the market tonnage head their way and it is simply impossible for Chattogram Buyers to keep the market propped up to the extent they have, for far too much longer.

So far this year, over 10 Capesize bulkers and 10 Panamax sized containers (all over 20K LDT) in addition to some of the larger VLOCs converted from VLCCs (of about 40K LDT), have all been committed for recycling, such is the ongoing predicament on charter rates in these particular sectors and more is reportedly set to follow during the course of the year

As a result, it may be wise to urge some caution moving forward, as weak freight markets and bullish demo levels can only mean a continued glut of vessels hitting the market, which is only going to put further downward pressure on prices in the months ahead.

For week 11 of 2019, GMS demo rankings / pricing for the week are as below.
Demo RankLocationSentimentDry Bulk USD/LDTContainers USD/LDTTankers USD/LDT
1BangladeshSteadyUSD 440/LTUSD 460/LTUSD 450 / LT
2IndiaSteadyUSD 425/LTUSD 445/LTUSD 435 / LT
3PakistanSteadyUSD 410/LTUSD 430/LTUSD 420 / LT
4TurkeySteadyUSD 270 / MTUSD 270 / MTUSD 280/MT
 

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Posted By : Rabi Wangkhem on Mon, 18 Mar 2019
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