GMS Reports Market Turmoil Driven by Tariffs

• Trump’s tariff deadline passes with no response, triggering market volatility.
• Ship recycling sector sees rising steel prices but sluggish vessel supply.
• New regulatory hurdles and market uncertainty weigh on global recycling yards

According to GMS’ latest weekly report (Week 28 of 2025), the global ship recycling market continues to be gripped by volatility, with geopolitical uncertainty, tariff wars, and seasonal slowdowns combining to create a challenging environment for recyclers and vessel owners alike.

Tariff Shock: Trump’s Deadline Expires, Markets React

Former U.S. President Trump’s self-imposed July 1st deadline for trade partners to offer tariff-offsetting proposals passed with no meaningful response, prompting an escalation in trade tensions. A new final deadline of August 1st has now been set, while tariffs ranging from 15% to 50% are expected to begin rolling out by the end of July.

Financial markets reacted swiftly:

• Major global indices fell sharply.
• The U.S. Dollar saw erratic movements, notably with the Turkish Lira breaching TRY 40 against the dollar for the first time.
• U.S. inflation remains on the rise, further adding pressure.

Steel Prices Rise Despite Dull Recycling Sentiment

Surprisingly, steel plate prices increased across all ship recycling destinations, including China, offering some encouragement for potential vessel valuations. However, recycling activity remains subdued, as:

• Sellers remain absent from bidding tables.
• The Baltic Exchange dry bulk index jumped 13.5%, driven by:
  • Capesize Index up 26.4%
  • Panamax +8%
  • Supramax +2%

This freight market strength has kept potential recycling tonnage limited, as shipowners hold back from scrapping decisions.

Seasonal and Regulatory Challenges Slow Momentum

The monsoon season continues to slow recycling operations in South Asia due to:

• Partial yard closures from heavy rains.
• Labor shortages as workers return to home regions.
• Sluggish movement of recycled steel to re-rolling mills.

Further compounding the situation:

• The Hong Kong Convention entered into force on June 26th, bringing new compliance expectations.
• Owners remain hesitant to send ships to uncertified Pakistani HKC yards, even those operating with an interim DASR certificate.
• New regulatory and documentation requirements are increasing confusion and slowing decision-making.

Tonnage Supply Remains Low Despite Improved LDT Volume

While supply of scrappable vessels has been weak throughout the year, this past week brought a notable uptick in total LDT, especially at certain recycling destinations. Notable developments include:

• Larger vessels such as LNG carriers and VLOCs entering yards.
• A Handymax bulker was recently sold to Bangladesh at just USD 390/LDT, marking a new pricing low.

This is a steep drop from early 2024 highs of USD 600/LDT, indicating how far the market has retreated due to uncertainty and limited demand.

Regional Market Overview: Week 28 Rankings