In an earnings briefing Euroseas chief executiveAristides Pittas indicated that an acceleration of infrastructure spending inIndia, which Modi and other members of the Bharatiya Janata Party (BJP) haveidentified as a top priority, is a “wild card” worth watching.
In response to a question from Harsha Gowda, the head ofUS investment manager BlueShore Capital, Pittas said the sweeping victory ofthe BJP in recent elections is “a very positive development” that will impactstrategic decisions going forward.
“It’s a very positive development and wedo hope that Mr. Modi is successful in growing that country at a much fasterpace,” he said when pressed about the Prime Minister, who will be sworn in on26 May, and the BJP’s goal of following a growth model that mimics China’s.
“This is a very recent development and [a]very positive development we have to say, which has not impacted our decisions,until now, because it hadn’t happened [even though] we anticipated that [Modiwould win the election].”
When asked for an opinion about trendsin the demolition market, both now and in the future, Pittas acknowledged thatscrap prices have soared significantly in recent months but was quick to pointout that charter rates are, and will continue to be, a key driver of activity.
“If the charter market is low than we can expect to see increased scrappingbuoyed also by the improvement on the scrap prices but the main consideration [fora shipowner when determining whether it should scrap ageing tonnage] is thecharter market,” Pittas said.
The executive argued that it will be a “record year” for the torching ofcontainerships and said Euroseas wasn’t expecting to see an equal level ofaction on the dry-bulk side but admitted it also thought freight rates to beslighter higher than where they are today.
“On the drybulk sector we were up until now less optimistic that we wouldsee a lot of scraping because we had thought that the market would be stronger,”he explained, adding: “We now see that it’s not [panning] out like that.”
While Pittas acknowledged he wasn’t expecting the demolition market tobe active in the first-half he continues tobelieve bulker rates will improve in the second, which is why he thinks scrapping “willbe kept at slightly lower level” going forward.
Earlier this week GMS, which billsitself as the world’s largest cash buyer of scrap tonnage, said thereis a clear connection between the ongoing uptick in demolition prices in India andthe outcome of the election, which caught few industry observers by surprise.
“The sensationalnews concerning the landslide election victory for the pro-business Mr Modisaw levels and optimism surge in India, leaving rival markets, Pakistan and Bangladesh,trailing in their wake,” the firm wrote in a weekly report.
“Improvementswill certainly be needed from the competing markets if they are to secure anyof the market tonnage at present. But for now, India is basking in the victoryof the favoured election candidate.
“Steel prices have improved, the stock market hassurged, and the currency was trading into the 58’s against the US Dollar as theweek ended, leaving sentiment and the desire to acquire new units, positivelybuzzing.”
