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Dry bulk carriers increasingly heading for demolition

Some surprising sales – particularly of panamax bulkers – seemed to indicate a firming market this week. However, many of these improvements do appear illusory as cash buyers continue either to speculate on prices or offer crazy numbers on the back of demand from a specific ship recycler from the Bangladeshi market, who has taken a keen interest on a particular unit. On the other side, India remains stagnant and pragmatic, unwilling to jump up by more than a few $/LDT (even on select / favored tonnage being proposed to local recyclers) as Pakistan continues to remain cautious for the most part, unable to match Bangladesh’s pricing / sentiments, despite demand clearly improving over the recent few weeks. There still appears to be some uncertainty in Pakistan as to just how much, the implemented taxes will affect the bottom line of local ship recyclers and there is talk that some buyers may even sit out the month of September entirely, until this is fully understood. Bangladesh therefore is the one market that is presently leading international prices, yet demand there remains specific and volatile with buyers often changing their mind on pricing particular vessels, from one moment to the next. As the fourth quarter approaches, it will be interesting to see whether this recent momentum will be maintained going forward or whether it is just another flash in the pan”, GMS concluded.

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In a separate report, shipbroker Intermodal noted that “a rather unexpected increase of dry bulk demo candidates in the market, gave a further extension to the healthy activity we have been noticing in the Indian subcontinent market during the past week, while the cherry on top of that was no other than the firming of prices that took place, which was neither insignificant nor expected. The answer to the question whether pure speculation or actual end demand is currently behind this strong and rather sudden momentum is probably positive. The reality is that fundamentals have not changed materially in any way for the market to keep firming at the moment and that all this hype could well be the result of cash buyers trying to prop up prices, possibly to support previous purchases as well. We have indeed seen some very impressive levels last week being offered for dry bulk tonnage, with Bangladeshi breakers leading the way and forcing their counterparts to follow up to a certain degree, while in our opinion, restricted supply of demo candidates is key in order to support current price levels. Prices this week for wet tonnage were at around 180-290 $/ldt and dry units received about 170-280 $/ldt.”, Intermodal concluded.

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Similarly, in another report, shipbroker Allied Shipbroking said that “with the number of demo candidates in the market having been reduced considerably, it looks as though the conditions might have been right for competition to help fuel some meaningful increases. We have seen this in part play out, despite most end buyers still holding a fairly cautious stance, as there is little to support any excess in terms of speculative buying. In part the lack of demo candidates has played its part, though we haven’t seen buying appetite do it’s typical post-summer spike which would be calling for a completely different market given the current circumstances. There is a sense that we may well be in the process of another upward market movement over the coming weeks, especially as demo candidates are likely to remain relatively few and far between for now, with most sellers likely holding out for a hopeful seasonal improvement in the freight market, looking to make some last minute earnings before they send of their overage units to be beached”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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