- Two OFAC-sanctioned VLCCs, Artemis III and Itagua, remain stuck OPL Chattogram after failed resale attempts.
- BSBRA and local banks refuse deals violating U.S. and international sanctions.
- India also restricts transactions, despite past cases using alternative payment methods.
- Ship recycling market may firm up in Q2 amid reduced vessel supply and rising demand, but economic instability persists in Bangladesh and Turkey.
This week, the shipping industry has been closely watching the fate of two OFAC-sanctioned Very Large Crude Carriers (VLCCs) that arrived OPL Chattogram but are now stranded. According to cash buyer GMS, these vessels, Artemis III and Itagua, have failed in multiple resale attempts due to the risks associated with their transactions.
Neither vessel has obtained a No Objection Certificate (NOC) required to enter port limits for recycling. BSBRA and local L/C transacting banks have refused to engage in deals that openly violate U.S. and international sanctions.
India is taking a similarly cautious stance, despite previous instances where sanctioned vessels bypassed restrictions through non-USD payment arrangements, says GMS. However, recent U.S. State Department sanctions on entities involved in such sales—including Iran’s Oil Minister—indicate that future deals will likely face even greater scrutiny.
Dark Fleet Transactions Under U.S. Scrutiny
Several OFAC-sanctioned and dark fleet vessels continue to circulate in the market, facilitated by cash buyers willing to circumvent international regulations for profit, says GMS. However, these transactions may soon come under intensified investigation by U.S. authorities.
“They may soon come under fiery investigations from U.S. authorities under the current Trump administration that want to ensure no escape routes or future transmission of funds to/from such transactions occur,” warns GMS.
As regulatory pressure increases, the long-term future of dark fleet recycling remains uncertain, with potential legal and financial consequences for those involved.
Ship Recycling Market Trends and Economic Conditions
Despite the uncertainties surrounding sanctioned vessels, the ship recycling market may see a stronger Q2. A slower supply of candidates, driven by freight rate recovery, particularly in the dry bulk sector, could lead to increased demand and higher vessel pricing.
However, economic instability persists in key ship recycling nations:
- Oil prices remain weak, closing at USD 68.30 per barrel.
- Ship recycling currencies, except for India, have declined against the U.S. Dollar.
- Local steel prices remain volatile, impacting market sentiment.
While India and Pakistan have shown signs of economic stability, Bangladesh faces domestic challenges, and Turkey struggles under currency depreciation and fresh political protests following the arrest of Istanbul’s mayor, the leading opposition candidate in the upcoming elections.
Looking Ahead: Key Market Expectations
The ship recycling market is expected to get busier in H2 2025, as tonnage supply may increase post-April. Additionally, the upcoming Hong Kong Convention (HKC) enforcement on June 26 raises concerns about the upgrade timeline for yards in Bangladesh and Pakistan.
As regulatory and market dynamics continue to evolve, the industry will need to navigate compliance challenges while adapting to shifting economic and geopolitical conditions.
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Source: Marine News Magazine
