Steel Prices, Repair Costs Soar

Friday, May 07, 2004
Latest quotes from China are showing radically higher steel repair figures, according to sources. From about 70-80 cents per kg a year ago, steel repairs are now being quoted at $1.30-1.50 per kg by Chinese repairers. “This reflects the fact that they don’t really want the work”, said one source. “They’re full!”. Nevertheless these new price levels are still well below Black Sea rates of close to $2 per kg and south European prices of well over $3 per kg. Despite a period of unprecedented profitability in most key markets, owners’ approach to ship repair has not changed, repair sources are saying. First, owners sought to postpone repairs as long as possible to make the most of soaring spot and short-term rates. After bulk markets had improved so quickly, owners were doing their best to obtain class extensions wherever possible. And class societies were reasonably flexible, say sources, although repair men are not prepared to go “on the record” to say so. Now, owners’ attention has switched to focusing on possible Far Eastern voyages to reposition ships for cheaper repairs in the East, rather than pay a premium in the Mediterranean. European repair yards are clearly frustrated by this – some owners have been making day rates of four, five or six times recent levels and could easily afford to support repair yards in Europe battling with a strong euro.

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