GMS’s recent report indicates that two VLCCs, which have violated USDN (United States Dollar Network) regulations and are now subject to OFAC (Office of Foreign Assets Control) sanctions, are currently stranded outside Bangladeshi territorial waters. These vessels lack any immediate or foreseeable options for scrapping or dismantling, reports Safety4sea.
Economic Volatility
The recent issues with the “behemoth duo” (likely referring to large vessels facing problems) have made cash buyers and ship recyclers more cautious about due diligence before negotiating on vessels, especially those suspected of being from sanctioned sources. There are reportedly still some vessels in cash buyer hands waiting for resale. The outcome of these future deals involving sanctioned vessels remains uncertain.
The economic volatility of 2025 continues to bring unexpected developments. Oil prices, influenced by new sanctions on Iran and Venezuela, have shown increased instability, despite an overall weekly decline, ending higher than the previous week at USD 69.40 per barrel.
Conversely, charter rates across the dry bulk shipping sector, including Handies, Panamaxes, Capes, and Supras, have declined, leading to a drop in the Baltic Dry Sea Freight Index.
This decline in charter rates has been accompanied by a slight increase in recycling inquiries from sellers. In a surprising turn, Pakistan received more vessels for recycling than India this week, despite an overall decrease in vessel arrivals and deliveries across the subcontinent.
Domestic Fundamentals
The current state of ship recycling markets, focusing on domestic fundamentals is as follows:
- Steel Plate Prices:
- In India, steel plate prices have significantly increased.
- In Pakistan, they have continuously decreased over the past month.
- In Bangladesh and China, prices have remained stagnant at low levels.
- Currency Fluctuations:
- The U.S. dollar’s performance against local currencies has been inconsistent.
- Market Dynamics:
- Bangladesh is showing unexpected market strength, despite the Eid holidays and the end of Ramadan, likely due to active recyclers.
- India and Pakistan are struggling to maintain pace.
- The availability of vessels for recycling is limited.
- Bangladesh is offering slightly higher prices (over USD 450/LT LDT) for specific vessel types (tankers and containers) from the Far East.
- This has caused India and Pakistan to pursue smaller vessels that are closer to them geographically.
- Regulatory Deadlines:
- The Hong Kong Convention (HKC) deadline of June 26 is approaching.
- The March 31 deadline for yard upgrades in Bangladesh has not been extended, which will restrict many Bangladeshi recyclers from importing vessels after Eid.
- Pakistan is in the early stages of yard upgrades and needs to accelerate its efforts.
- Turkey is benefitting from the weakened Lira.
Did you subscribe to our daily Newsletter?
It’s Free Click here to Subscribe!
Source: Safety4sea
