According to GMS’ latest report, 2025 draws to a close as a challenging year for the global ship recycling industry, shaped by economic uncertainty, volatile markets, and geopolitical tensions. While pricing pressures and limited vessel availability persisted throughout the year, meaningful progress in regulatory compliance across the Indian subcontinent offers a cautiously optimistic outlook as the industry heads into 2026.
Market Pressures and a Quiet Recycling Year
Despite notable improvements in infrastructure and compliance, ship recycling prices remained significantly below the highs of January 2024, when levels crossed USD 600 per ton. Persistent declines in local steel plate prices across India, Pakistan, and Bangladesh, combined with currency volatility, political uncertainty, and even monsoon disruptions, continued to weigh heavily on sentiment.
Vessel supply remained scarce throughout the year, resulting in subdued activity at bidding tables and an unusually quiet recycling waterfront. Aside from occasional large LNG carriers and older bulkers, 2025 lacked the volume typically expected in an active recycling cycle. This trend was reinforced by weakening freight indicators, with the Baltic Exchange Dry Index falling another 0.8% this week to its lowest level since October, driven by declines across Capesize and smaller vessel segments.
Regulatory Progress and Signals for 2026
One of the standout developments of 2025 was the significant progress made on Hong Kong Convention (HKC) compliance across the Indian subcontinent. Infrastructure upgrades undertaken ahead of year-end marked an important milestone for the industry and laid a stronger regulatory foundation for the future.
Meanwhile, oil prices showed mixed signals, rising 0.82% this week to USD 57.21 per barrel, but still closing December down 3.56% and nearly 20% lower year-on-year. Steel plate prices mirrored this volatility, shifting unpredictably between gains, losses, and periods of limited trading.
Looking ahead, expectations of continued freight market strength into early 2026 could further delay vessel recycling until mandatory surveys and dry dockings begin. This potential pause, however, may provide Pakistan and Bangladesh with a valuable window to secure additional HKC yard approvals and strengthen readiness for increased volumes next year.
As 2025 concludes, the ship recycling industry stands at a crossroads. While pricing challenges and limited supply defined much of the year, substantial progress on HKC compliance offers renewed confidence for 2026. If regulatory momentum continues and market conditions stabilize, the coming year could mark a turning point shifting the sector from survival mode toward a more structured and sustainable future.
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Source: SAFETY4SEA
