A Covid-19 outbreak has shut down the Dubai headquarters of cash buyer GMS.
The closure comes as cash buyers struggle to unload demolition tonnage after being caught out by a slump in scrap steel prices.
Reports of the severity and extent of the outbreak vary widely, but sources with direct knowledge of the company's operations confirmed to TradeWinds that the GMS Dubai office closed earlier this week after staff tested positive for coronavirus.
The United Arab Emirates as a whole is experiencing a spike in Covid-19 infection rates and on 20 January reported 3,506 new cases, its highest number to date. In response, Dubai has imposed additional restrictions on entertainment and tourism.
GMS chief executive Anil Sharma did not respond to enquiries from TradeWinds, but others with direct information commented that this week of turmoil in the scrap markets was "not necessarily the worst time for it to happen".
"Everything is still being done on time by GMS staff working from home, contracts are being signed and payments are being made," said a well-placed source, who spoke on condition of anonymity.
The same source told TradeWinds that industry talk of the extent of the outbreak had been exaggerated. Reports are circulating that a large majority of GMS Dubai staff tested positive, but sources told TradeWinds that the company has mentioned internally five or six individual cases.
GMS is understood to have been stuck with a large backlog of tonnage for disposal at the time of a sudden drop in scrap prices earlier this week.
Recent GMS acquisitions are said to include two VLOCs — the 298,000-dwt Stellar Pioneer and Stellar Topaz (both built 1994) — purchased "as is" in Labuan for $430 per ldt, or $19.8m, in a deal reported last week.
Commenting on the market downturn in its latest weekly report, GMS said the drop in scrap steel prices in a generally optimistic market was “shocking and unexpected”.
“This has subsequently left several cash buyers holding some of their high-priced inventory once again, and they will certainly be hoping for offers to bounce back to somewhere near previous levels, in order to simply break even on their units,” GMS said in the report.
