- US Inflation Rises After Failed Trade Push, Dollar Volatile.
- Oil Prices Drop to USD 66.5 Amid Sanctions and Supply Worries.
- Baltic Exchange Slides Again as Capesize Index Falls Sharply.
GMS’ latest report shows that July is still feeling the pinch of economic strain across global markets. A lot of this turmoil can be traced back to unpredictable trade policies from the U.S., which, as the report vividly puts it, feels like the car is in drive while reversing off a cliff. These ongoing uncertainties in policy have created waves throughout financial systems around the globe, reports Safety4Sea.
Inflation Makes a Comeback in the U.S. as Trade Promises Fall Short
With former President Trump’s ambitious 90 deals in 90 days initiative failing to produce results, inflation in the U.S. has ticked up for the first time in four months. This has led to notable market instability. The currency markets were particularly rattled, with the U.S. Dollar experiencing significant fluctuations worldwide, even losing ground against the Turkish Lira—an outcome that caught many analysts and traders off guard.
Oil Futures Drop Amid Political Strains and Oversupply
The oil markets are feeling the heat from a mix of geopolitical tensions and internal competition within OPEC+. Trump’s renewed threats of sanctions against Iran, along with a sentiment-driven push for increased oil production throughout July, have only added to the overall uncertainty. Consequently, oil prices fell, wrapping up the week at USD 66.5 per barrel.
Baltic Exchange Falls Again with Capesize Weakness
The Baltic Exchange has taken another hit this week, continuing its downward trend. We saw a 2.1% drop, primarily due to a 5.3% decline in the Capesize index. While there was some positive movement in the Panamax and Supramax segments, it wasn’t enough to counteract the overall decline. The market sentiment remains quite bearish, especially as the supply of recycling tonnage at bidding tables keeps shrinking.
Recycling Destinations Face Challenges with HKC Changes
The rollout of the Hong Kong Convention (HKC) has caused notable disruptions in South Asian recycling hubs. In Pakistan, officials have stated that only yards that commit to HKC upgrades will be granted provisional DASR certificates, and all incoming vessels must now have a mandatory Inventory of Hazardous Materials (IHMs).
Bangladesh is still getting used to the HKC protocols, which are slowing down the processing of recent tonnage arrivals under the new compliance rules. On a brighter note, Indian recyclers seem to be gaining some momentum, with at least one new arrival reported and a slight uptick in local steel plate prices. The presence of HKC-compliant yards in Alang continues to provide owners with a dependable option for quick transactions.
Sales Drop Below USD 400/LDT as Buyers Explore Lower Offers
The number of completed recycling sales is still quite low, with buyers cautiously testing the waters with lower bids. Over the past month, transactions have been limited, and the trend of falling prices shows no signs of reversing. This week, a Handymax bulker in poor condition was privately sold in the USD 390s per LDT, based on expected redelivery to Bangladesh. This points to a concerning decline in pricing and a hesitance among sellers to make commitments unless necessary.
Stricter Regulations Reshape Regional Recycling Landscapes
The introduction of the HKC has brought about stricter regulations and documentation requirements that are transforming the recycling landscape in the region. Bangladesh has made it clear that only yards approved by the HKC are allowed to import vessels. While this change is causing a slowdown in activity, it also marks a significant shift towards safer and more sustainable recycling practices.
In Pakistan, regulatory bodies are starting to align with HKC standards after a long period of inconsistency. India seems to be adapting more smoothly, thanks to its existing infrastructure and compliance measures. On the other hand, Turkey is still grappling with economic challenges, especially due to its unstable currency, but not much else has changed in its recycling sector.
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Source: Safety4Sea
