Pakistan: Shipbreaking Industry Remains Inactive, Dollar Exchange Rate Stabilizes

According to recent reports, Pakistan's shipbreaking industry has displayed no new activity to report this week. The inventory at the yards has also been exhausted with very little new tonnage being presented, which shows that there is a demand from the recyclers for anything that comes to the market in the upcoming weeks.

Dollar stabilizes as country escapes IMF mediation - Pakistan, having avoided IMF intervention to refinance their debt, has managed to stabilize the dollar exchange rate which is a positive sign. However, other international and local factors are likely to keep ship prices under control, such as the decline of shredded scrap prices and the shutdown of a major construction company caught in a court case, which has reduced rebar demand for the time being.

Pakistan displays unstable sentiment shipbreaking market - This week has been no different for the shipbreaking industry, with an unstable and inactive sentiment dominating. Prices for containers have been estimated at USD 425/LDT, whereas tankers have been judged at USD 415/LDT. Dry bulk cargo has been estimated at USD 405/LDT. Similarly, rates for wet bulk cargoes have been related at USD 410/LDT-420/LDT.

The shipbreaking business in Pakistan is at a bleak point, as any New Year optimism has totally shattered with absolutely no positive outlook emerging from the waterfront. With the owners supplying low on a continuous basis, due to the profit-bearing freight rates, it would have been expected for price levels to jump up.

The government's announcement of another mini-budget pushed Gadani buyers to wait and see if any new regulation maybe announced to fix flood of cheap billets from China and Iran.

The only favorable side to this correction could be that the industry stakeholders would, at last, be able to see the whole scenario clearly and convince some buyers back into the market to repurchase tonnage, provided that the owners accept a new market position and start building some momentum this year.