Indian Scrapping Sector in Another Gloomy Week
Indian sub-continent shiprecycling destinations have seen another negative week of pricing following the release of the 2017 budget announcements, according to GMS, a cash buyer of ships for recycling.
The Bangladesh Shipbreakers Association (BSBA) submitted an official appeal to the finance minister in order to try to reduce, or reverse the punitive duties and taxes imposed on the domestic shiprecycling sector by the budget.
However, there has been no positive outcome and it does seem as though prices will soften by about USD 40 – 50/LDT going forward, especially if the full conditions of the budget come into effect.
“The extent of the falls witnessed over the last month or so have indeed been rather unexpected and shocking to the industry overall,” GMS said, adding that at least USD 50/LDT have come off prices ever since the markets came to within inches of touching the USD 400/LDT mark during the first quarter of the year.
Despite the firming levels at that time, supply remained relatively stagnant, especially when compared to the corresponding period last year. The markets have witnessed a sharp reduction in the number of containers and bulkers heading to the beaches this year with only a marginal increase in the number of tankers proposed so far, GMS informed.
Given the recent negative ongoings, declining prices and bad budgets, “end buyers across the sub-continent markets remain extremely conservative and cautious with their pricing.”
Considering that vessel prices had recorded a remarkable increase of over USD 100/LDT during the peak this year, even with the recent declines, levels today “are strong and remain about USD 50/LDT above those from January 1, 2017.”
GMS said that it therefore expects the summer months to remain modest in terms of pricing and activity as cash buyers and sellers wait for some added stability and aggression to buy while the markets adjust to the new ‘lower’ prices on show.