Bangladesh Obsolete-Ship Price Slumps, Vessel Buyer GMS Says

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Wednesday, 08 April 2009

The price Bangladeshi ship- demolition buyers are willing to pay for obsolete coal and grain carriers fell 6.7 percent as local scrap-metal prices slumped, the largest cash buyer of unwanted vessels said. General-cargo ship prices declined to $270 per lightweight displacement ton from $290 a week ago, Cumberland, Maryland- based Global Marketing Systems Inc. said in an April 3 report e- mailed today. Lightweight displacement tons measure the weight of a ship's hull, machinery, equipment and spares.
Bangladeshi ship dismantlers have added to the nation's supplies of scrap metal after a shortage of gas and electricity eased, enabling them to increase demolitions, GMS said. At the same time, the scrappers have "massive inventories" of vessels to break up, meaning they have less need to purchase carriers.
Owners of coal, ore and grain transporters need record demolition to help quell the fastest-ever expansion of the fleet. Shipowners placed orders for new carriers with a combined transportation capacity of 294,731 deadweight tons, according to London-based Drewry Shipping Consultants Ltd. That's 70 percent of the 421,023 tons of capacity competing for cargoes today.
GMS Chief Executive Officer Anil Sharma said in January that scrapping would climb to a record over the next three years as slowing economies create a glut of ships.
Bangladesh's ship-breakers, who had been banned from demolishing vessels by the nation's High Court, are operating under a three-week reprieve while they prepare a response to the ruling, GMS said last week.
The price fetched by ships as scrap is one indicator monitored by some shipping analysts to value owners' fleets.
Scrap prices for oil tankers declined 8.8 percent to $310 per lightweight displacement ton, GMS said today.
Ship-tracking data on Bloomberg show 230 vessels whose last destination was Chittagong, Bangladesh. Forty were scrapped, according to Lloyd's Register-Fairplay data.
Source: Alaric Nightingale, Bloomberg