- Ship Recycling Markets Enter a Lull as Prices Remain Under Pressure.
- Bangladesh Leads Ship Recycling as Market Activity Declines.
- Higher Freight Rates Delay Scrapping, Sub-Continent Recyclers Face Downtime.
Following a frenetic January of negotiations and a late February through early March of deliveries—almost 200K of LDT in the last few weeks—the Indian sub-continent ship recycling market has seen an era of quiet reflection. Cash buyer GMS says an alarmingly low number of deals have been concluded in the last few weeks, reports Marine Link.
Declining Prices and Minimal Sales Activity
“And ever since prices have been at and even well under the now chased after USD 450s/LDT across the board (as confirmed via last week’s logger sale into Bangladesh), barely any sales have even been rumored to take place.”
Despite declining price levels, Bangladesh continues to dominate the regional ship recycling industry. India remains subdued, but Pakistan has become more competitive, snapping at Bangladesh’s heels for the scarce available units. The effect of this can be seen in the sluggish activity at Alang anchorage and Pakistan’s second delivery in three months this year.
Impact of Freight Market Trends on Ship Recycling
“It has been a number of weeks since we saw more than one market unit concluded into the sub-continent ship recycling markets as the Baltic’s Dry Bulk Sea Freight Index reported further climbs and registered its highest levels since November 2024, further deviating dry bulk and container freight sectors away from the bidding tables as firming rates push on and are maintaining the backlog of vintage / over aged vessels on the high-seas over the last few years.” Higher freight rates are discouraging shipowners from scrapping vessels, adding to the slowdown in the recycling market.
Conflicting Market Signals and the Influence of Steel Prices
The market is getting conflicting signals from international economic trends. The U.S. Dollar has been volatile, depreciating against some currencies and appreciating against others. At the same time, Indian and Pakistani local steel plate prices are still exerting downward pressure on market sentiment. Chinese steel plate prices have, however, finally hardened after a long while of softness, which should have a positive effect on sub-continent recycling markets in the long term.
Upgrading Yards in Preparation for Hong Kong Convention Compliance
With not enough tonnage to go around, recyclers in Pakistan and Bangladesh are utilizing the downtime to upgrade their yards to Hong Kong Convention standards before enforcement on June 26. Most Alang yards in India are already accredited.
“A number of larger LDT OFAC listed / sanctioned vessels remain unsold in cash buyer hands amidst fresh sanctions being imposed on vessels currently idling outside Bangladesh, highlighting once again the risks some cash buyers are willing to take and the international laws they are willing to violate, just to make a quick buck,” says GMS.
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Source: Marine Link
