According to the latest report by GMS, a combination of geopolitical instability, economic swings, and operational disruptions is shaping a challenging and uncertain ship recycling market. As world affairs accelerate in complexity, the maritime sector—especially ship recyclers—are caught in the crossfire of volatile global dynamics.
Escalating Geopolitical Turmoil Clouds Trade Confidence
The India–Pakistan ceasefire remains fragile, with intermittent violence along the LoC. PM Modi has reaffirmed India’s commitment to Operation Sindoor, targeting terrorist elements in Pakistan-occupied Kashmir. The killing of the mastermind behind journalist Daniel Pearl’s 2001 execution adds further tension.
Meanwhile, Israel’s intensified offensive against Hamas in Gaza and rising military support for Ukraine from the EU continue to heighten the global security threat. These flashpoints are creating new risks for vessel movements and insurance premiums—both critical for recycling and chartering activities.
Freight Surge and Oil Market Volatility Send Mixed Signals
Despite global tensions, freight markets surged by 6% across all segments last week, buoyed by rising charter rates. A 90-day U.S.–China tariff truce provided temporary relief, with crude oil futures rising 1.4% to USD 62.5/barrel.
However, the fate of the Iran Nuclear Deal remains a wildcard—success could introduce an additional 200,000 barrels of oil/day into the market, affecting freight planning and oil-linked shipping demand. This unpredictability complicates long-term investment decisions for shipowners considering recycling aging fleets.
Ship Recycling Faces Currency Turbulence and HKC Challenges
The U.S. dollar’s rise against most South Asian recycling currencies (except China) has added cost pressures. Steel plate prices remain erratic, making it harder for recyclers to forecast profits. In Bangladesh, a backlog of vessels awaiting NOCs is easing, thanks to ministry approvals for newly HKC-compliant yards.
However, many ships remain stranded, especially those committed to non-certified yards. While activity in India and Pakistan is more robust, HKC compliance hurdles, price volatility, and weak demand are constraining momentum. Analysts expect a slight uptick in tonnage arrivals later this year as aging vessels exit charters during the post-monsoon period.
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Source: SAFETY4SEA
