- Freight Market Strength Delays Bulk Carrier Scrapping.
- Falling Scrap Prices Reduce Incentives for Ship Demolition.
- Bangladesh Leads Global Shipbreaking Industry.
The dry bulker shipbreaking market witnessed a historic low in 2024 as only 65 bulk carriers were scrapped, aggregating 3.3 million Dwt. This is way less than the 10-year average of 151 vessels and the lowest level since 1990. The scrapped vessels had the following break-up: 4 Capesizes, 17 Panamaxes, 16 Handymaxes, 12 Handysize, and 16 Minibulkers, reports Break Wave Advisors.
Strong Freight Market Delays Scrapping
The dry bulk sector also continued to be profitable during 2024, with freight greater than operating expenses, lessening the need for older vessels to be scrapped by shipowners. Forward Freight Agreement (FFA) curves show that C5TC rates will average $19,000/day in 2025, significantly higher than in 2022 and 2023 when scrapping was more prevalent.
As fleet expansion slowed to a near 20-year low rate of 3.4% during 2024 and is anticipated to continue at 3.3% in 2025, shipowners have hesitated to take retirements. The average age of bulkers was 12.4 years at the end of 2024 and is forecast to increase to 13.3 years in 2025, placing many vessels firmly within their working lifespan. As long as market conditions are good, shipowners will be able to stretch out the life of their vessels, instead of scrapping them.
Slipping Scrap Prices Dim Shipbreaking Incentives
The weakening of world steel prices has further deterred ship scrapping. Prices of rebar steel decreased 8% year-on-year to an average of $488.9/ton in 2024, mostly because of China’s property slowdown. The scrap steel market, which is directly related to rebar prices, followed accordingly.
The bulk carrier average scrap price fell to $500/Ldt in 2024, the lowest since the COVID-19 pandemic. The temporary spike in the first half of the year was fleeting, with prices declining to $445/Ldt by March 2025. The Capesize Recycling Value (CDISRA) also shows this declining trend. Capesize demolition rates reached an all-time high of $11.4 million in mid-2024, before falling 3.6% to $10.3 million at the end of the year. Prices have further eroded in 2025, with the most recent CDISRA price at $9.8 million.
Bangladesh Dominates the Shipbreaking Industry
Shipbreaking operations are still focused in South Asia, and India, Bangladesh, and Pakistan together represent 92% of the world’s ship recycling. Bangladesh is still the largest shipbreaker and the leader, scrapping an array of dry bulk ships.
About demolished ships, Supramaxes experienced the most demolitions, while Panamaxes had the largest number of scrapped Dwt. This reflects the existing fleet structure, with Supramaxes and Panamaxes constituting 32.2% and 23.1% of the active dry bulker fleet, respectively.
Environmental Regulations and Compliance Challenges
The scrapping age of bulk carriers averaged 32.7 years in 2023 and decreased to 28.5 years in 2024, while Panamaxes averaged 28.3 years and Supramaxes 31 years. But even with this younger scrapping pattern, environmental regulations pose a significant threat to the shipbreaking industry.
According to the NGO Shipbreaking Platform, 80% of the world’s scrapped tonnage in 2023 was dismantled under substandard conditions on the beaches of South Asia. GMS, the world’s largest cash buyer of ships, reports that 117 shipbreaking yards in South Asia are compliant with the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC).
HKC-Compliant Facilities
The top shipbreaking destination, Bangladesh, now has merely seven HKC-compliant facilities. But with the HKC coming into enforcement in June 2025, local administrations are urging an upgrade in compliance, with the industry estimating up to 133 compliant facilities before the enforcement of the convention.
2025 Outlook: No Significant Change in Demolition Activity
So far in 2025, the pace of dry bulker demolition remains in line with previous years, showing no significant shift in market behaviour. Whether this trend will persist throughout the year remains uncertain. However, unless freight rates weaken or scrap prices rebound, large-scale demolition activity in the dry bulk sector appears unlikely.
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Source: Break Wave Advisors
