Cracks started to appear this week in what had otherwise been a firming market for the past month or so, especially in India and Pakistan.
The Bangladeshi capacity worries have been well documented, so it was no surprise to see rates tail off there - particularly with no end buyers to pick up the huge volumes of tonnage that remain, and continue to pour into the market.
More of a surprise was the sudden reversal and dropping in levels in both the Pakistan and Indian markets. The huge oversupply of vessels may be one reason as scrap steel prices and the currency remained relatively steady and there certainly remained a number of keen end buyers willing to bid on available tonnage, albeit at notably lower rates.
With cash buyer speculation hitting overdrive in the previous few weeks, several deals done at big numbers started to fall by the wayside as deals were abandoned, deposits not lodged and MOAs not signed.
Indeed, one 10 KLDT bulker with a spare propeller the WHITE ARROW was fixed to two different buyers at unrealistically high numbers, only to come back open for bidding with commitments broken and the vessel left to face the reality of a falling market.
There is some hope that levels will pick up again in the coming weeks as Diwali approaches in India (and as long as local fundamentals are unchanged). Yet if charter rates stay as they are, both sentiment and demand may have some way still to fall. To that end, we may see local buyers sitting out of the action until a new reality on levels is seen.
For week 36 of 2012, GMS demo rankings for the week are as below:
|Country||Sentiment Market||GEN CARGO Prices||TANKER Prices|
|Pakistan||Weak||USD 400/lt ldt||USD 425/lt ldt|
|India||Weak||USD 395/lt ldt||USD 425/lt ldt|
|Bangladesh||Weak||USD 385/lt ldt||USD 420/lt ldt|
|China||Weak||USD 280/lt ldt||USD310/ltldt|
Source - GMS Weekly