Ali / +N February 17 th, 2017 Volume 174, Issue 762 Week 07 The harder the conflict, the more glorious the triumph. - Thomas Paine Highlights: MARKET COMMENTARY ENDURING EXUBERANCE! Indian steel gains. On the back of some encouraging gains in the Indian steel markets, local sentiment and prices surged during the course of the week. Accordingly, most cash buyers ramped up their speculative offerings for market tonnage, a strategy that has characterized much of the year and showed few signs of abating last week. High priced sales. Indeed, there were a series of further high priced sales that left many in the industry scratching their heads, as a serious disconnect currently exists between cash buyer offers and the reality on the ground in the sub-continent markets. Distressed sales. Furthermore, news of distressed cash buyer sales suggest losses have been incurred on several of the over exuberant purchases a curious and certainly unsustainable business model for those continuing to push the envelope. March uptick? The feedback from local markets suggests many of these prices are either purely cash buyer speculation or for only a select few end users who are hot for tonnage, behind whom a far more conservative layer of end buyers remain. China rally. It seems many are banking on a March uptick in prices, a risky tactic given the influx of tonnage that is expected to continue and local fundamentals (currencies and steel prices) as volatile as ever. Much will depend on China and the recent rally on iron ore imports / steel production and the upswing in prices seen so far this year there. As long as this steel is consumed domestically and does not lead to a surplus (resulting in the (cheap) exports that killed the ship recycling industry through much of 2014 2015), the foundations for a sustained improvement in the international ship recycling markets could be well founded. For week 7 of 2017, GMS demo rankings for the week are as below: Cash Buyer to be ISO 9001:2008 Certified Demo Ranking Country Market Sentiment GEN CARGO / BULKER Prices CONTAINER / TANKER Prices 1 India Improving USD 300/lt ldt USD 330/lt ldt 2 Pakistan Improving USD 295/lt ldt USD 325/lt ldt 3 Bangladesh Declining USD 290/lt ldt USD 320/lt ldt 4 China Improving USD 250/lt ldt USD 260/lt ldt 5 Turkey Improving USD 195/lt ldt USD 205/lt ldt
GMS Weekly Page 2 of 8 BANGLADESH ACUTE APATHY! Unwilling to compete. Steel reversal. Most of the major end buyers in Bangladesh displayed an acute apathy to compete at the levels that many cash buyers have been offering their tonnage of late. As such, it proved to be a difficult period in reselling any units into Chittagong and aptly positioned vessels in the Far East were being redirected towards competing markets. This made the sale of the Zodiac controlled capesize bulker CAPE TAVOR (21,220 LDT) all the more curious, being concluded for an extremely firm USD 345.50/LT LDT basis a Bangladesh only delivery. The vessel seems to be for a buyer who has a specific banking requirement to import a vessel at present. Local steel plate prices have actually shown a reversal in fortunes this week and sentiments / demand from the lowest placed Indian sub-continent market remain decidedly muted for another week. MARKET SALES REPORTED VESSEL NAME TYPE LDT REPORTED PRICE CAPE TAVOR Bulker 21,270 USD 345.5/LT LDT
Page 3 of 8 GMS Weekly INDIA BOUNCING BACK! Having previously been the lowest placed market in the Indian sub-continent, a stunning surge in Indian steel plate prices saw the Alang market racing back to the front of the sub-continent leaderboard this week. Steel surge. This year has certainly seen some rollercoaster pricing and no sooner had levels deteriorated by nearly USD 15/LT LDT at the end of January (leaving end buyers anxious and unwilling), they then rebounded by the same amount leaving the industry on a high by the end of the week. As such, some of the recent speculative sales somehow seemed justified, despite some clearly loss-making deals being concluded into India just the previous week alone. Several sales. On the sales front, MSC NOA (13,552 LDT) from MSC fetched a decent USD 337/LT LDT, whilst the box type general cargo vessel SEA PEARL (12,107 LDT) was finalized for an extremely firm USD 325.25/LT LDT, given her comparatively older age and less preferred country of build (1986 Poland built). MARKET SALES REPORTED VESSEL NAME TYPE LDT REPORTED PRICE MSC NOA Container 13,552 USD 337/LT LDT SEA PEARL General Cargo 12,107 USD 325/LT LDT
GMS Weekly Page 4 of 8 PAKISTAN RESISTING THE TEMPTATION! Back in business? Several sales last week including that of the 2001 built capesize bulker STAR ELEANORA, 23,954 LDT that fetched USD 345/LT LDT, seemed to suggest that the Pakistani market was fully back in business. While the import of vessels is now allowed, cutting permission for the vessels already occupying local yards has been sporadic and not fully permitted to all end buyers at this time. The yards where the accidents took place are still closed for investigations, amidst rumbling compensation claims for the victims. Over hyped bubble. Once again there appears to be an over riding resistance to meet cash buyer asking levels from a majority of Gadani recyclers, with many perceiving the market to be far lower than the overhyped bubble seen at present. NO MARKET SALES REPORTED
Page 5 of 8 GMS Weekly CHINA ON THE UP! The positivity displayed by the Chinese market sustained for yet another week with some competitive numbers being tabled from Chinese yards for geographically positioned vessels and those for green recycling (competing with India). Positivity remains. The gap in prices is not significant at present (less than even USD 50/LDT from the subcontinent markets) and local steel plate prices too remain positive. As such, demand from both the North and South Chinese yards remains healthy as the constant supply of Chinese flagged, government controlled tonnage eligible for the state subsidies has slowed somewhat this year, given the improvement in freight rates. Demand good. NO MARKET SALES REPORTED
GMS Weekly Page 6 of 8 TURKEY FUNDAMENTALS BOLSTER SENTIMENTS! Several units being discussed. The uptick in local steel plate prices last week in addition to the gradual firming of the Turkish Lira (now trading at TRY 3.62 against the U.S. Dollar) has resulted in a busy week for the Turkish recycling sector with discussions on several offshore units now being reported. After record declines, the Lira is stronger and has displayed more signs of stability over recent weeks, subsequently firming local sentiments. Local steel plate prices too have remained firm and are expected to further improve in the coming weeks. Levels inch up. While no market units have reportedly been fixed to local buyers, prices for dry and wet units have firmed by at least USD 5/MT with further improvements anticipated in the week(s) ahead. Owners with units in the area should reconsider Turkey once again, in order to exploit the potential improvements that the Turkish Spring has to offer. NO MARKET SALES REPORTED
Page 7 of 8 i Miscellaneous EVERYDAY SAYINGS EXPLAINED Rule of Thumb A law from the middle ages allowing a man to beat his wife with a cane no thicker than his thumb. Scott Free - The origin of the phrase is Scandinavian and the word scot meaning payment. Around the 13th century a great municipal tax called scot was imposed on the Scandinavian people. All households were required to pay according to their means but the peasants were exempt. They were known as scot-free. Square Meal - Used to describe a good, nutritious dinner, it is a nautical phrase dating back centuries. Sailors on old battleships had notoriously poor diets - breakfast and lunch would rarely be better than bread and water - but the last meal of each day would at least include meat and have some substance. Any significant meal would be served on large square wooden boards - designed to be stacked and stowed easily - hence the phrase a square meal. Start from Scratch - During medieval horse races competitors would start at a line scratched into the ground by either a sword or a javelin. If competitors cut corners, or strayed from the set course of the race, they would have to start again from the scratch.. IMPORTANT DATES BANK HOLIDAYS INDIA BEACHING TIDES February 24 Maha Shivratri March 13 - Holiy February 08 February 15 February 25 March 04 March 10 March 16 March 26 April 03 BANK HOLIDAYS BANGLADESH BEACHING TIDES February 21 Shahid Dibosh March 17 - Bangabandhu Birthday March 26 - Independence Day February 12 February 15 February 28 March 02 March 13 March 15 March 28 March 31 IMPORTANT BANK HOLIDAYS TURKEY PAKISTAN CHINA No holidays in Feb + Mar March 23 Pakistan Day No more holidays in Feb + Mar Prices indicated above are as reported in the market and are not necessarily accurate. This information is provided without prejudice and is given in good faith and without any guarantees whatsoever. While every care has been taken in the preparation of this report, no liability can be accepted for any loss incurred in any way whatsoever by any person relying on the information contained herein. Opinions expressed herein may be deemed subjective and arbitrary. This WEEKLY is intended only for the person or entity to which it is addressed and may contain confidential and/or privileged material. Any review, retransmission, dissemination or other use of this information by persons or entities other than the intended recipient is prohibited.
GMS Port Report Page 8 of 8 ALANG - Port Position as of February 17, 2017 No. VESSEL NAME LDT TYPE STATUS 1 Infinity 7,878 Bulk Carrier Arrived October 04, 2015 2 Jaohar Zanobia 3,757 General Cargo Arrived February 14 3 MSC Eugenia 22,077 Container Beached February 13 4 Roman 20,092 Container Beached February 11 5 Sealand Eagle 18,758 Container Beached February 14 Total Tonnage 72,562 CHITTAGONG - Port Position as of February 17, 2017 No. VESSEL NAME LDT TYPE STATUS 1 Gas Concord 17,916 LPG Beached February 15 2 Helen 7,400 Container Beached February 15 3 Hua Sheng 10,537 Bulk Carrier Beached February 12 4 Kota Wisata 7,005 Container Beached February 16 5 Sea Zenith 2,295 General Cargo Beached February 14 6 Tiger Spring 2,845 General Cargo Arrived February 06 Total Tonnage 47,998 GADANI - Port Position as of February 17, 2017 No. VESSEL NAME LDT TYPE STATUS 1 Hammonia Francia 23,666 Container Beached February 11 2 KG Ocean 9,759 Bulk Carrier Beached February 11 3 Maria K 3,643 Bulk Carrier Arrived February 14 4 Portland 7,965 Bulk Carrier Arrived February 13 5 Rehina B 5,708 General Cargo Beached February 13 6 Seba M 3,663 Bulk Carrier Beached February 12 7 Tango 21,039 Bulk Carrier Beached February 11 Total Tonnage 75,443 WHILE EXTREME CARE HAS BEEN TAKEN IN THE PREPARATION OF THIS REPORT, NO LIABILITY CAN BE ACCEPTED FOR ANY LOSS INCURRED IN ANY WAY WHATSOEVER BY ANY PERSON RELYING ON THE INFORMATION CONTAINED HEREIN.