The recent U.S. announcement of tariffs on steel imports is poised to exert downward pressure on global steel prices and further weaken ship recycling markets across the Indian subcontinent, according to leading cash buyer GMS.
Tariffs Fuel Market Volatility
The Trump-led tariffs are contributing to a rapidly changing global economic landscape. GMS notes that international trade is becoming increasingly erratic and volatile, with shifting policies undermining stable business practices. The cumulative impact is likely to result in a year of subdued performance across key economic indicators.
Freight Markets Swing Amid Dry Bulk Surge
Freight rates remain volatile, as evidenced by last week’s decline followed by a significant rebound. The Baltic Dry Index surged by nearly 5%, led by a 10.6% jump in the Capesize sector, which hit its highest level since April.
Monsoon Season to Weaken Recycling Demand
The onset of monsoon rains is expected to bring the usual decline in ship recycling activity and steel demand in the coming quarter, regardless of vessel availability. Seasonal disruptions will likely put additional downward pressure on pricing.
Currency Challenges and Subcontinental Disparities
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Most major ship recycling currencies weakened against the U.S. Dollar, with Pakistan being the only exception.
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India saw a notable 5% drop in tonnage offers compared to early May, as recyclers faced challenges following a recent conflict with Pakistan.
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In contrast, Pakistan reported more ship arrivals than India over the past two weeks, despite limited readiness for upcoming regulatory changes.
Pakistan Behind on Hong Kong Convention Compliance
Pakistan’s Gadani ship recycling yards are lagging in preparations for the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships, which takes effect June 26. Despite some early steps, no yards are expected to be compliant in time.
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Source: MARINE LINK
