December 26 th, 2014 Volume 148, Issue 652 Week 52 Highlights: Watershed year! Nobody trips over mountains. It is the small pebble that causes you to stumble. Pass all the pebbles in your path and you will find you have crossed the mountain. MARKET COMMENTARY YEAR IN REVIEW! - Anonymous It has been another remarkable, watershed year in the ship recycling industry with subsidies imposed in China, looming EU regulations placing greater emphasis on Indian sub-continent yards to raise their standards of operation to the upper echelons of green recycling, and ship volumes remaining high and prices (relatively) punchy! 4 th quarter disappointment. The fourth quarter of this year has been the one major disappointment with the import of cheap Chinese billets being the driving factor behind an unrelenting price depreciation that has seen around 20% decline in Indian sub-continent prices almost USD 100/LT LDT! Market booming. Since the start of the year, prices had arrowed up dramatically from the low-to-mid USD 400s/LT LDT, to peak well above USD 500/LT LDT, and with fierce competition seen on available units in addition to new cash buyer shops seeking to get in on the booming action. The market was booming in the early part of the year and ship owners too enjoyed some fantastic residual prices for their overaged vessels. Currencies were settled and steel prices improved as end users sought to get their hands on vessels being offered in the market. Volumes down from previous years. An improving freight market and a frantic past few years however could not see volumes replicate the all time historical highs of 2012 (the record year in terms of LDT and number of vessels recycled) and 2013 (the second highest year on record). Overall, volumes have come off by around a third, so there remains decent capacity at yards to take vessels. However, a large and diverse number of candidates remain available for sale from all sectors. 2015 expected to remain busy. 2015 is expected to be another active year for ship recycling with a large order-book likely to see perhaps even more vessels scrapped than 2014 the depreciation on fourth quarter prices may have pushed many owners to withdraw vessels as well until a hoped for market recovery. For week 52 of 2014, GMS demo rankings for the week are as below: Cash Buyer to be ISO 9001:2008 Certified Demo Ranking Country Market Sentiment GEN CARGO Prices TANKER Prices 1 Pakistan Weak USD 405/lt ldt USD 430/lt ldt 2 India Weak USD 400/lt ldt USD 430/lt ldt 3 Bangladesh Weak USD 400/lt ldt USD 425/lt ldt 4 Turkey Weak USD 290/lt ldt USD 300/lt ldt 5 China Weak USD 220/lt ldt USD 250/lt ldt All at GMS would like to wish our readers, a Merry Christmas and a Happy New Year!
GMS Weekly Page 2 of 8 BANGLADESH SECOND FIDDLE! Not as busy! Outfought! Compared with previous years when Bangladeshi buyers were submerged by a deluge of large LDT, high profile units, it has been a relatively quieter year for Chittagong buyers. Fewer favored capesize bulkers, VLCCs, and suezmax tankers (gas free for hot works) have been available for sale. Many of the panamax containers have likewise ended up heading to India, where buyers on the whole have been more aggressive to acquire. Similarly, Gadani buyers have led the year on larger LDT vessels, with the majority of VLCCs and even panamax bulkers (almost 70 scrapped in total) heading to Pakistan throughout the year. However, with many capesize bulkers expected to hit the market due to the oversized order-book next year, it may be a busy year to come for Bangladeshi buyers once again. NO MARKET SALES REPORTED
Page 3 of 8 GMS Weekly INDIA CAPTIVATED BY CONTAINERS! 2014 has been a year characterized by a swarm of panamax-sized containers during the first half of the year, as many of the major liner services and KG funds in Germany scrapped vessels in large and lucrative enbloc deals. Panamax container crazy! India has been the go to destination for any type of container vessel this year (despite Pakistan and Bangladesh buying the odd one or two). The overall lower steel wastage, powerful machinery, and heavy non-ferrous propellers have seen containers priced even above tankers (gas free for hot works) for much of the year in India. The new eco-type containers set to hit the market in the coming years will see traditional defunct units continue to trend in India in 2015, as long as the price stabilizes. Despite the currency settling for much of the year (one of the chief concerns of 2012 and 2013 where drastic depreciation saw many ship recyclers go out of business), the fourth quarter has again seen some worrying reversals on the Indian Rupee (ending the week at Rs. 63.7, down from Rs. 63.4 against the U.S. Dollar) and many end buyers are once again in wait and watch mode. Steel prices have remained as volatile as ever over the course of the year, but as long as capacity is standing at over 50% (as it is currently), there will be demand for new units at whatever the new realities are, so expect Indian buyers to be back to business as usual come the new year. Fourth quarter woes. Capacity good. Several vessels were concluded this week at some strong numbers basis a Jan end / early Feb delivery with the respective Cash Buyers taking a punt on a potential market improvement again. MARKET SALES REPORTED VESSEL NAME TYPE LDT REPORTED PRICE MSC ISABELLE Container 3,438 USD 414.50/LT LDT THAI DAWN General Cargo 7,780 USD 410/LT LDT (Enbloc) THAI HARVEST Bulk Carrier 8,155 USD 410/LT LDT (Enbloc)
GMS Weekly Page 4 of 8 PAKISTAN STEPPING UP! Frontrunners (for much of year)! Limiting output. Up until the final few months of the year, Pakistan buyers had been market frontrunners on much of the larger LDT tonnage particularly tankers gas free for man entry only, including the majority of VLCCs. The import of Chinese billets has been particularly tough on local buyers who are now seeing the existing inventories on their plots undercut by a cheaper (but lower grade) of steel. However, in a turn of events, Gadani buyers are again looking to lead the market by placing new import duties / taxes on the cheap Chinese steel and they are also limiting the volume of steel collected from yards that is being resold to domestic mills each week, to reduce competition. 2015 is expected to be a watershed year for Pakistan, with pressure on moves towards greater standards in yards (due to upcoming EU legislation) meaning that tankers going to Pakistan may have to be cleaned gas free for hot works, as with India and Bangladesh. It is hoped that Gadani buyers will embrace such responsibilities and continue to look to lead the industry as they have done for large parts of this year. NO MARKET SALES REPORTED
Page 5 of 8 GMS Weekly CHINA SUBSIDIES STALL MARKET! The Chinese market has been dominated by the government subsidies, which have granted state owners a USD 150/GRT premium on Chinese flagged vessels scrapped within China and a USD 150/GRT discount on the corresponding new-building. State owners profit. The scheme has been widely criticized for not rebalancing the global fleet (for every vessel scrapped one has been added), but it has stimulated domestic growth and activity in domestic shipbuilding and ship recycling yards alike. The main beneficiaries have been the largest state companies such as COSCO and China Shipping, although many private owners have still opted to bring their vessels across to the sub-continent where a USD 200/LDT premium has been available for much of the year. The scheme is expected to run until the end of 2015, so it will be another quieter year ahead on international tonnage into Chinese ship recycling yards. NO MARKET SALES REPORTED
GMS Weekly Page 6 of 8 TURKEY QUIET END TO THE YEAR No new units concluded. It was rather a quite week for Turkish recyclers, in view of Christmas holidays being celebrated in most parts of the world. Hardly any units were reportedly negotiated and overall there were no fundamental changes to (positively) affect the domestic recycling market. As such, the sentiment remains positive and end buyers are in a buying mood, especially for quality units. Nonetheless, like the week of Christmas, the last week of December is expected to be quiet with most people getting ready to welcome the New Year. NO MARKET SALES REPORTED
Page 7 of 8 i Miscellaneous HMMMMM Approximately one-sixth of your life is spent on Wednesdays. You can actually sharpen the blades on a pencil sharpener by wrapping your pencils in aluminum foil before inserting them. 12 newborns will be given to the wrong parents daily. 160 cars can drive side by side on the Monumental Axis in Brazil, the world s widest road. A company in Taiwan makes dinnerware out of wheat, so you can eat your plate. A cow produces 200 times more gas a day than a person. A dime has 118 ridges around the edge. A dragonfly has a lifespan of 24 hours. A giraffe can clean its ears with its 21-inch tongue. A giraffe can go without water longer than a camel can. A goldfish has a memory span of three seconds. A Saudi Arabian woman can get a divorce if her husband doesn t give her coffee. A shark is the only fish that can blink with both eyes. BANK HOLIDAYS IMPORTANT DATES INDIA BEACHING TIDES January 01 New Years Day January 04 Eid-E-Milad January 14 Pongal, Makra Sakrant January 26 Republic Day January 02 January 09 January 19 January 26 BANK HOLIDAYS BANGLADESH BEACHING TIDES December 31 Bank Holiday January 01 New Years Day January 04 Eid Milad Un-Nabi January 06 January 09 January 21 January 24 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 December 26, 2014 No. VESSEL NAME LDT TYPE STATUS 1 Ainaftis (Dead Vessel) 3,911 Container Beached December 20 2 Bale 3,035 RoRo Arrived December 26 3 Caravel Pride (Dead vessel) 4,480 Container Arrived December 25 4 Clipper Concord 3,540 General Cargo Arrived December 22 5 Coral 3,881 LPG Arrived December 22 6 Express 2,232 General Cargo Arrived December 19 7 Marie 9,909 General Cargo Arrived December 04 8 Mega Grace 9,689 Woodchip Carrier Beached December 24 9 Mercury 7,452 Bulk Carrier Arrived December 18 10 MSC Clementina 15,137 Container Beached December 24 11 Paris Y 4,117 Bulk Carrier Arrived December 20 Total Tonnage 67,383 CHITTAGONG - Port Position as of December 26, 2014 No. VESSEL NAME LDT TYPE STATUS 1 Arctic 19,472 LNG Beached December 23 2 Atlantic Impala 9,025 General Cargo Beached December 23 3 BNS Abu Bakr 2,515 N/A Beached December 25 4 Bright Future 1,878 General Cargo Arrived December 19 5 Cape Hawk 19,624 Bulk Carrier Beached December 25 6 Danum 153 2,659 General Cargo Arrived December 25 7 He Fu 6,628 Bulk Carrier Arrived December 19 8 Ji Peng 3,135 Container Beached December 26 9 Moon 3,585 Container Beached December 24 10 Peak 3,569 Container Beached December 25 11 Reina Rosa 4,256 General Cargo Beached December 22 12 TCI XPS 1,636 General Cargo Beached December 20 13 Trans Tenang 8,119 Bulk Carrier Arrived December 21 Total Tonnage 86,101 GADANI - Port Position as of December 26, 2014 No. VESSEL NAME LDT TYPE STATUS 1 Hebei Mountain 41,003 VLCC Beached December 24 2 Nami 10,670 Tanker Arrived August 25 3 Ocean 1,062 Tug Beached December 23 Total Tonnage 52,735 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.