- Bangladesh Faces Delays, India Gains on Stability.
- H2 Recycling Activity Set to Rise Amid Trade Disruptions.
- Older Vessels Likely to Boost Supply in Coming Months.
According to the latest report from GMS, the ship recycling industry is currently navigating a sea of uncertainty, thanks to ongoing global trade disruptions, rising inflation, and shifting market dynamics. These hurdles are putting a strain on pricing, sentiment, and overall activity in all the major recycling hotspots, reports Safety4Sea.
Tariffs and Red Sea Disruptions Stir Market Confusion
The ongoing tariff situation has created a wave of instability in global trade, leaving recycling markets in a state of confusion for more than two months. Recent incidents, like the sinking of merchant ships in the Red Sea by Houthi forces, have further complicated trade routes, adding to the market’s volatility.
Inflation Rises in the U.S., Dollar Strengthens
In June, U.S. inflation ticked up to 2.7%, up from 2.4% in May, which is putting additional pressure on global economies. Meanwhile, the U.S. Dollar has gained strength against all major currencies used in ship recycling this week, tightening financial conditions in key recycling areas.
Oil Prices Slip Amid Sanctions Talk
Oil futures dipped by 0.3% to USD 67.3 per barrel, amid discussions of potential new sanctions from both the EU and former U.S. President Donald Trump, particularly aimed at Russian energy exports. These broader economic pressures continue to shape the landscape of shipping and recycling.
Baltic Dry Index Climbs to 10-Month High
The Baltic Exchange’s Dry Index saw a 1.1% increase this week, hitting its highest level since September 2024. This rise adds pressure to the supply of recyclable tonnage, which has only seen a slight rebound recently, despite an uptick in demand.
Subcontinent Markets Remain Muted Under HKC Pressure
In recent months, subcontinent recycling activity has shown little sign of recovery. Market sentiment and pricing remain subdued, with many recyclers feeling comfortable offering below USD 400 per LDT, especially as compliance measures under the Hong Kong Convention (HKC) continue to take effect.
Subcontinent Trends and H2 Recycling Outlook
Bangladesh is still grappling with bureaucratic challenges, particularly with delays in getting NOC and L/C approvals. However, the market remains lively thanks to some significant LNG vessel deals. On the other hand, India is proving to be a reliable, albeit cheaper, option for owners who are wary of the DASR process in Pakistan. As we move into the second half of the year, we might see an uptick in recycling candidates since older vessels are becoming less viable, especially with the disruptions in the Red Sea and rising costs on COGH routes. Meanwhile, Turkey’s market is still pretty quiet, showing no major shifts.
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Source: Safety4Sea
