A recent surge in freight rates across multiple shipping sectors has significantly reduced the availability of ships for recycling, particularly in India and Pakistan, according to cash buyer GMS.
While the dry bulk sector has seen a notable uptick, the wet market has been performing relatively better, further limiting the supply of vessels for scrapping. The Panamax segment, which previously struggled, has also seen a rate rebound, with owners of older vessels opting to continue operations instead of scrapping.
Key Market Trends
- Freight Rate Surge Reduces Tonnage for Recycling
- Increased demand for bulk carriers has led to fewer ships being scrapped.
- Pakistan’s recycling market is now experiencing an empty port position once again.
- Economic & Policy Influences
- The Chinese New Year slowdown and Trump’s tariff releases have added market volatility.
- Crude oil prices have hovered around USD 70/barrel due to sanctions and growing U.S. reserves.
- Steel Price Fluctuations Affect Ship Recycling Offers
- Local steel plate prices remain flat or in decline in key ship-breaking markets.
- Recycling offers have dropped by USD 30/LDT since January, with a floor settling at USD 450/LDT.
Outlook for Q1 2025 & Compliance Updates
- Potential Tonnage Return in Late Q1 2025
- Pakistan has re-entered the market, securing a small LDT vessel, though overall activity remains low.
- Bangladesh & Pakistan Ramping Up Compliance
- Shipyard upgrades in Chattogram and Gadani are underway ahead of the Hong Kong Convention enforcement in July 2025.
- These upgrades are essential to meet environmental and safety standards for ship recycling.
The ship recycling sector remains under pressure, but with potential market corrections expected later in Q1, recyclers remain hopeful for an uptick in activity.
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Source: Marine Link
