As inflation picks up worldwide and the U.S. economy shrinks in Q1, the global shipping and ship recycling industries are navigating rough waters. A mix of geopolitical tensions, energy price drops, and stalled regulatory approvals are slowing down activity across key recycling markets in South Asia, according to leading cash buyer GMS.
Recession Worries and Dollar Weakness Weigh on Global Trade
The U.S. economy’s contraction and weakening dollar are shaking up international trade dynamics. As several countries realign trade partnerships outside the U.S., freight rates have shown slight improvements, yet overall activity remains muted. The Baltic Exchange Dry Index has ticked upward, but the long-term outlook remains cautious amidst a shift in global trade flows.
Oil and Steel Prices Plunge Amid Uncertainty
Oil futures fell sharply to $58.29/barrel—down 1.6%—due to waning energy demand and uncertain sanctions tied to the Russia-Ukraine conflict. Simultaneously, global steel plate prices, critical for ship recycling valuation, have flatlined across China and the Indian subcontinent, reflecting broader market stagnation and weak industrial demand.
Regulatory Bottlenecks and Regional Tensions Slow Ship Recycling
Ship recycling markets, especially in Bangladesh, have faced significant delays due to month-long halts in granting No Objection Certificates (NOCs). Although approvals have resumed, the backlog and inconsistent yard upgrades continue to delay operations. Meanwhile, political tensions between India and Pakistan after a deadly attack in Kashmir have added further volatility. As recyclers grow cautious and tonnage availability remains low, attention has turned to Indian and Pakistani yards, though activity remains limited.
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Source: MARINE LINK
