GMS Market Commentary on Shipbreaking in Week 44
Following further bad news concerning the rapid and continued spread of Covid-19 in the Western world, leading to yet more lockdowns across Europe
and other areas around the world, a momentous week lies ahead with the upcoming U.S. Presidential Election and its potential repercussions that could also be felt the world over. UK has followed Germany, France and Austria in enforcing a four week lockdown, in the run up to Christmas and any hopes of a return to normality at the end of this year have been dashed by this news.
Perhaps, shipping markets have yet to feel the full impact of these new draconian measures and the subsequent economic misery that is likely to follow for many. However, it is the outcome of the US elections, which may have the bigger overall impact on the markets in the long run. Dry rates remain firm, despite the extreme volatility being witnessed in the Capesize Bulker sector, as Containers continue to fly, whilst there is talk of more Tankers being introduced for recycling from the New Year onwards.
Indian sub-continent recycling markets have therefore seen the recent heat sustained, with some impressive numbers seen on an additional two VLOCs sold for recycling, whilst a larger Passenger vessel and Bulker have also been sold for levels into the high 300s/LDT, although USD 400/LDT on conventional units has yet to be breached.
China has been the surprise story in recent times, paying into the mid-to-high USD 300s/LDT on domestic, state owned, Chinese flagged tonnage and a decent LDT FPSO was sold for levels even above those seen from Bangladesh last week, as the country makes rapid progress in the recovery from Covid-19.
Finally, the Turkish market seems to be entering a state of stasis as the Lira rockets past TRY 8.0 this week, causing increasing caution in local sentiments and reticence from Local Buyers in offering firm numbers this week.