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Demolition Market On “Rally” Mode

Demolition Market On “Rally” Mode
The demolition market has been trending upwards lately.

In its latest weekly report, the world’s leading cash buyer, GMS, said that “the upward market trajectory continued on this week with some spectacularly priced deals being concluded by ever-eager Cash Buyers and willing recyclers. At present, there is no telling where the current rally may end. However, the ongoing shortage of tonnage that is increasingly aggravating a firming demand is likely a big part of the reason that the industry has witnessed a flurry of excellently priced deals this week. The ascending local steel plate prices have not been entirely expected. However, following the onset of this years incessant monsoon rains that have engulfed much of the sub-continent and subsequently resulted in a shortage of local product being available to the domestic steel mills has driven prices for ships at the ongoing rate. The principally buoyant Bangladeshi market is still enjoying the positive fallout from the reversal of their budget from some weeks ago and the buying has ramped back into gear ever since and after a tentative and idle last few months. This week, the industry also welcomed the news out of India where the GMB (Gujarat Maritime Board) issued an ultimatum to those Alang yards that have yet to modernize and improve their facilities under the guidelines laid out in the Hong Kong Convention (HKC) for ship-recycling. This is certainly a bold and forward thinking maneuver by the Indian government that should be applauded as it seeks to raise local standards after the great strides that have already been made over these past few years, with over 38 local yards already bearing HKC class approvals from the likes of NK, Rina and IRS. In Pakistan, there was a lot of confusion as Prime Minister Nawaz Sharif was forced to resign following a decision by the country’s Supreme Court, reportedly due to corruption charges. However, in times of turmoil, commodity markets often push on and the present times in Pakistan seem no different”, GMS concluded.

In a separate note, shipbroker Clarkson Platou Hellas said that “contrary to the general feeling that usually surrounds the summer holidays getaway, it appears the recycling market is taking off again with more tonnage being circulated, mainly tankers, and price levels on the ‘up’. The doldrums that had settled into the recycling industry has now kicked started in to life and more activity is now evident, surprising given the time of the year. The discussion now is apparently whether this is a short term gain and as we once again edge closer to the USD 400/ldt level, how long will this increase in sentiment last? There is no doubt that the rates have shown improvements recently, as evidenced by recent sales, but the general feeling is one of a temporary climb. The main reason seems to be that the Bangladesh Buyers are the most competitive for the time being. The severe rains/monsoon period that has eclipsed Bangladesh has ensured limited supply of materials to the steel mills and subsequently, domestic prices have increased. However, the question would appear to be whether these rates will be sustained once the rains have receded and inventories are once again resold from the recycling yards. The pointer, as always, comes from China and with more iron ore and steel being acquired by the country, it may indicate a continued positive sentiment across the board until the end of the year. There is an intriguing scenario developing across the Indian sub. Continent markets. With the Pakistani breakers still unable to acquire tanker units, any dry tonnage, particularly capesize bulk carriers and large container units are certainly attracting positive interest from the recyclers in the Gadani location. The majority of tanker units circulated will continue to be committed to Bangladesh buyers in view of their price levels out of the reach of their counterparts from India, therefore Alang is really seeing miscellaneous units arriving to their shores. Elsewhere, the Chinese recyclers are very quiet in relation to acquisitions of internationally owned tonnage, concentrating solely on the internally supplied units, but Turkey is certainly a destination that can offer viable competition to the Indian Sub. Continent for those smaller units that become open/available in the North European-East Mediterranean ports range”, the shipbroker concluded.

Finally, Allied Shipbroking added that “there was a sharp rise in both activity and prices this past week, with competition amongst breakers intensifying and driving up the market considerably. The previous effects that were being noted from the retraction of the tax in Bangladesh still seems to be causing “ aftershocks” in this regard, however it also seems that the market has benefited from favorable movements in foreign exchange rates as well as a significant boost in the price of steel plates both in the Indian Sub-Continent as well as in other major demo countries. With the demand for steel now on the rise, it seems as though that this monsoon period may well turn out to be one of the most bullish on record, with many buyers now having renewed appetite and keenly looking to secure any demo candidates that show up in the market. We have even seen some quite high purchases on “as is, where is” showing by what extent the market has moved in a short space of time, while as always the biggest hikes have been on the higher profile/higher spec units”.

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