The Baltic Exchange’s main sea freight index has been declining for the past four sessions, reaching its lowest point since July 2023. This decline has positively impacted the ship recycling industry, as a larger number of ships are being scrapped, according to Marine Link.
Steady Supply Expected
Though the markets are not reaching the coveted USD 500/LDT mark yet, they have come out of a Q2 – Q3 and even early Q4, low. Supply is expected to remain steady or likely improve into 2025 despite trading markets performing impressively as they drive the global fleet to its highest average age ever. Increasing new-build construction in 2025 should phase out older units faster and ensure a steadier recycling supply.
“Additionally, despite China’s stimulus announcements promising stronger measures for its economy, Capesize bulkers managed to lose ground even further, and all eyes will now be peeled on Trump’s incoming tariffs that will manifest once he takes office from January 20, including the tariffs he intends to impose on China, in particular,” says GMS.
Stable Footing
In the interim, as global economies continue to find stable footing, the U.S. Dollar strengthens across the recycling board, all whilst local steel plate prices in both China and (consequently) India saw their levels decline in unison this week. This further exemplifies the unending problem of cheaper steel being dumped into sub-continent markets, which has seriously afflicted sub-continent steel prices for most of the year despite punitive tariffs being in place.
As recycling yards in Bangladesh and Pakistan remain in limbo, focus should now be on upgrading facilities by June of next year, in time to accede to the Hong Kong Convention. And with most yards in India already compliant, it falls squarely upon regional competitors to undertake improvements or risk missing out on recycling tonnage entirely.
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Source: Marine Link
