Live Mint reported that SCI has scrapped a tender to buy 4 dry bulk cargo carriers as demand for ships declines in the face of a slowdown in global trade.

Mr UC Grover director technical and offshore services said that “Demand has changed supply has changed. The future looks uncertain. We didn’t want to keep the tender open till eternity. It makes sense to scrap the tender now.”

Mr Grover said that “In such a scenario, there is no benchmark price available today for these types of ships.”

He said that given the changed scenario, SCI will have to undertake a fresh market analysis to determine the internal rate of return for buying cape size ships. He added that SCI hopes to revisit the purchase plan when the market stabilizes.

Mr Grover said that “At that time, we may go for a limited edition tender by inviting price quotations from all those who had participated in the September round.”

He said that “The advantage of this is that when the market improves, we can swing into action very quickly. As the technical specifications are frozen and known to the bidders, we can ask for price quotations and finalize the tender in a month.”

In September, South Korea’s STX Shipbuilding Co Ltd had offered to sell 4 Capsize ships at USD 94.10 million each. However, the rates for shipping dry bulk commodities such as coal, iron ore and steel have declined by more than 90% since September when the global credit squeeze started pinching world trade. Dry bulk cargo ship prices have plunged by as much as 70% since then.

SCI had plans to buy 72 new ships with an investment of USD 3.1 billion in the 5 year period beginning 2007. SCI has so far ordered 32 new ships worth at least USD 1.88 billion at various global yards to replace some of its ageing fleet, which has to be decommissioned in line with global maritime regulations. It plans to buy the remaining 40 new ships worth close to USD 2.6 billion over the next 4 years.

(Sourced from Livemint.com)