Pittas gets ‘Modi-fied’

The appointment of India’s new Prime Minister, Narendra Modi, bodes well for both the dry-bulk and containership markets, a leading shipowner told investors this week.
Narendra Modi

Narendra Modi

In an earnings briefing Euroseas chief executive Aristides Pittas indicated that an acceleration of infrastructure spending in India, which Modi and other members of the Bharatiya Janata Party (BJP) have identified as a top priority, is a “wild card” worth watching.

In response to a question from Harsha Gowda, the head of US investment manager BlueShore Capital, Pittas said the sweeping victory of the BJP in recent elections is “a very positive development” that will impact strategic decisions going forward.

“It’s a very positive development and we do hope that Mr. Modi is successful in growing that country at a much faster pace,” he said when pressed about the Prime Minister, who will be sworn in on 26 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 [Modi would win the election].”

When asked for an opinion about trends in the demolition market, both now and in the future, Pittas acknowledged that scrap prices have soared significantly in recent months but was quick to point out 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 scrapping buoyed also by the improvement on the scrap prices but the main consideration [for a shipowner when determining whether it should scrap ageing tonnage] is the charter market,” Pittas said.

The executive argued that it will be a “record year” for the torching of containerships and said Euroseas wasn’t expecting to see an equal level of action on the dry-bulk side but admitted it also thought freight rates to be slighter higher than where they are today.

“On the drybulk sector we were up until now less optimistic that we would see 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 to be active in the first-half he continues to believe bulker rates will improve in the second, which is why he thinks scrapping “will be kept at slightly lower level” going forward.

Earlier this week GMS, which bills itself as the world’s largest cash buyer of scrap tonnage, said there is a clear connection between the ongoing uptick in demolition prices in India and the outcome of the election, which caught few industry observers by surprise.

“The sensational news concerning the landslide election victory for the pro-business Mr Modi saw levels and optimism surge in India, leaving rival markets, Pakistan and Bangladesh, trailing in their wake,” the firm wrote in a weekly report.

“Improvements will certainly be needed from the competing markets if they are to secure any of the market tonnage at present. But for now, India is basking in the victory of the favoured election candidate.

“Steel prices have improved, the stock market has surged, and the currency was trading into the 58’s against the US Dollar as the week ended, leaving sentiment and the desire to acquire new units, positively buzzing.”

Euroseas Ltd.
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