GMS Market Commentary on Shipbreaking in Week 50 - Activity Alert
Activity has ramped up in the final month of the year, with several sales of diverse and some large LDT units registering across all sectors. All locations are now poised positively, with a firming demand and improving prices finally giving those Owners and Cash Buyers with tonnage to sell, some much-needed respite, especially after a disastrous fourth quarter that delivered some painful declines across nearly all of the recycling markets. Notwithstanding, with freight rates still performing admirably, many Owners are waiting to see how the higher priced low Sulphur fuel costs from January 2020 will impact their OPEX. This has likely prevented the deluge of scrap tonnage that many had been anticipating as 2019 neared an end, from surfacing. Instead, we continue to see the ongoing trickle from the middle of the year to the far more steady, but manageable, supply we are now witnessing.
Steel plate prices in India have improved by about USD 22/LDT over the last 4 weeks, whilst the Indian Rupee has firmed, settling from over Rs 72 against the U.S. Dollar, to the mid Rs 70s at the close of the week, in further encouraging developments on local fundamentals.
Pakistan has also come back into the picture of late, with steel plate prices improving and the currency likewise settling in, after a shocking year of depreciation that saw over 20% of its value wiped off. However, the key issue in Pakistan, after almost a year and a half on the sidelines, is confidence, and End Buyers will need to seriously get back into the groove of buying, especially as many steel mills remain closed, yards remain empty, and the PSBA on hiatus.
Bangladesh plate prices have actually endured turbulent fluctuations over the last few weeks, yet, demand for the right mid-sized units remains prevalent, given that most banks are unwilling to sanction L/Cs on the larger LDT units being proposed of late, whilst several End Buyers are still looking to fill their plots before the end of the year.
Finally, the situation in Turkey remains suspended in a coma, with fundamentals in relatively the same situation as previous weeks, a famished supply of tonnage, and an ever- desperate collection of recyclers who are fighting to keep their yards open.
Source : Strategic Research Institute