The subcontinent recycling market continues its price rally amid scarcity of tonnage being sent for demolition and soaring container freight rates. As the imported steel scrap becomes costlier due to increasing freight rates, the demand for domestic steel scrap gains momentum thereby giving boost to ship recyclers to offer competitive prices. The prevailing rates in the market may encourage owners of laid-up and aging tonnage to consider sending their vessels for recycling which can bring some balance in the prices. For now, the market is touching historic heights and may continue to do so in the upcoming weeks.
The OPEC on Wednesday arrived at an agreement with the United Arab Emirates after a 2-week long deadlock over its future oil production levels. The compromise between Saudi Arabia and U.A.E. is provisional and subject to approval at an as-yet unscheduled meeting of the cartel and a wider group, called OPEC+, that includes Russia-led producers.
Global stock markets rattle after a spike in U.S. inflation raised fears that the Federal Reserve might tighten policy sooner than expected. The Fed slashed rates to near zero at the beginning of the pandemic, and central bankers say they will not consider raising rates until there is a substantial economic recovery.
WHO sounded alarm over an increasing surge of Delta variants’ cases along with increased social mobility which is leading to frightening number of new cases and deaths in many countries across the globe.
Among the three subcontinent players, India continues to offer the lowest price as the economy has not completely recovered from the disastrous second wave and is feared to be on the verge of witnessing a third wave. The price gap has increased significantly and is currently approx. USD 50-60/LDT lower than its counterparts for conventional recycling and USD 80-90/LDT lower for Green Recycling.
The gap between domestic prices and imported scrap prices is widening and has led to substantial reduction in inquiries and orders from Indian mills for imported scrap.
The INR has lost some value against USD which makes it unfavorable for ship recyclers as they have to pay more than the estimated price while taking the deliveries of the vessel. It is currently trading at INR 74.59/USD.
Bangladesh is yet again leading the price board with good interest from buyers for small and mid-sized tonnage. Due to economic uncertainty caused by frequent lockdowns, the end buyers are bit hesitant to acquire larger tonnage but looking at the domestic steel prices there are good chances that larger tonnages will also receive interest from buyers soon.
The nationwide lockdown is lifted till July 22 for Eid al-Adha festival. Public transport will resume on a limited scale and shops will be reopened while maintaining health guidelines. However, after the Eid holidays, the strict lockdown will be in place again for 14 more days from July 23.
There is healthy buying interest from end buyers for mid-sized vessels and they are bidding competitively for the scarcely available tonnage in recycling market. They are slightly behind their Bangladeshi counterparts, but their appetite is sufficient to give a strong competition. Currently, the market activities are moving at a relaxed pace due to the upcoming Eid holidays next week which will remain in place till 25th June.
Monsoon is going on at full swing in this region and is highly affecting the beaching schedules in Gadani.
The ship recycling yard which was sealed due to the alleged tanker issue has now been unsealed giving indications that the inquiry has ended.
No new vessel has arrived in Aliaga this week.
Local market is stable but the Imported scrap prices have softened by USD 10/MT from previous week’s levels. The market will remain silent in the upcoming week due to Eid holidays in place till 26th July.
Turkish Lira has gained some strength this week after Central Bank decided to keep the interest rates unchanged and vowed to keep them there till inflation comes under control in its recent meeting. It is currently trading at TL 8.55/USD.
With relaxation of social distancing norms and an upsurge in tourists due to weakening Lira, the daily new cases numbers are rising from the range of 5k to 7k per day.