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Despite a brief weekly recovery, the dry bulk market has dropped significantly by 24% this month, while oil prices have risen over 3% amid OPEC+ policy shifts.
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Sub-continent recyclers are bracing for the potential return of cheap Chinese steel due to ongoing U.S.-China tariff tensions, which may disrupt local resale markets and pricing.
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Improving freight rates are reducing the availability of ships for recycling, even as regulatory pressures and the monsoon season approach, adding to industry-wide uncertainty.
Dry Market Trends and Oil Price Movements
Although the dry markets saw a 1.6% gain over the week, the broader outlook remains negative with a staggering 24% drop recorded this month, based on the Baltic Exchange Dry Index. In contrast, oil prices climbed over 3%, ending the week near USD 64.50 per barrel, as OPEC+ members reversed plans to increase output due to declining global energy demand.
Tariff Tensions and Impact on Sub-Continent Recyclers
The unresolved trade standoff between China and the United States continues to weigh heavily on Indian sub-continent recycling markets. Recyclers are particularly concerned about the re-entry of lower-cost Chinese steel, redirected due to tariffs, which could disrupt pricing and affect the resale of materials. The uncertainty surrounding reciprocal tariffs also complicates predictions about the future of vessel pricing and overall recycling activity.
Temporary Relief from Expected Supply Influx
A 90-day pause in tariffs has momentarily eased concerns about a flood of end-of-life vessels entering the recycling market. Many of these ships, particularly 1990s-built bulkers and containers, had outlasted their trading lifespans and were expected to head for dismantling in the latter half of the year.
Freight Market Gains Limit Recycling Supply
The strengthening of freight rates has slowed the flow of vessels into recycling yards. This supply limitation is keeping demand and scrap prices relatively stable. However, with the annual monsoon season just six weeks away and market fundamentals remaining shaky, uncertainty persists.
Currency Movements and Steel Price Decline
The U.S. Dollar displayed a mixed performance against currencies of major recycling nations this week. At the same time, steel plate prices are once again showing unfavorable trends, which may further squeeze recyclers’ profit margins.
Regulatory Challenges and Upgrade Urgency in Bangladesh
For non-HKC compliant recycling yards, the current slowdown could be an opportune moment to focus on facility upgrades. Meanwhile, in Bangladesh, clarity is still awaited on whether the government will extend the March 31st deadline for initiating yard improvements. If no decision is made by June 26th, non-compliant yards risk being shut down, adding further uncertainty to the country’s ship recycling future.
The ship recycling industry remains caught in a turbulent mix of regulatory deadlines, shifting trade policies, and unpredictable market dynamics—all of which will be decisive in shaping its near-term outlook.
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Source: Gibson
