Demolition Market Activity Subdued

Amid the Diwali holiday in India, it’s no surprise that the ship recycling market kept its subdued activity over the past week. In its latest report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “this week in the ship recycling market presented a rather subdued and cautious outlook, with little sign of positive momentum across regions. In India, market operations resumed today following the Diwali holiday, but there was a noticeable sense of hesitation among industry players, who are warily observing how demand unfolds in the post-festival period. Although there are hints of buying interest at current prices, the sentiment remains restrained, and substantial activity has yet to materialize. In Bangladesh, while prices have inched up from previously reported levels, this shift does not indicate any real improvement in market value. Instead, the adjustment reflects temporary, speculative positioning rather than genuine demand, and prices are anticipated to revert to prior levels by next week. Pakistan’s market remained largely inactive, with trading slowing to a near halt and market participants reluctant to make significant moves amid an uncertain outlook. Meanwhile, Türkiye’s market continued in its dormant state, with no substantial change in activity or pricing. Overall, this week highlighted an industry largely in a holding pattern, with minimal optimism or clear signs of growth across the major recycling markets. Global economic growth is expected to remain steady at around 3% next year, supported by a strong U.S. economy and anticipated interest rate cuts by major central banks. U.S. consumer spending fuels optimism, while Asia shows a mixed picture: India’s growth stays strong, but China faces challenges that may require significant stimulus. The outlook is positive overall, though potential policy changes in the upcoming U.S. election could introduce some uncertainty”, Best Oasis said.

In a separate report, shipbroker Intermodal said that “amidst the Diwali festivities, the recycling market witnessed another week of subdued activity, against a backdrop of uncertainty. Market participants are adopting a cautious, “wait-andsee” approach, monitoring the evolution of demand in the coming weeks. In Bangladesh, there was a modest rebound in cashbuying activity and prices, yet the sustainability of this uptick is dubious. This price increase appears driven more by expectations of future demand rather than any tangible rise in buyer interest.

The sales that took place ranged around $500/ldt, with a declining trend towards $450/ldt for less desirable units. Many yards have ceased operations for upgrading words to meet HKC standards. The country faces economic challenges, despite government efforts to stabilize the national economy. A factor weakening local steel demand is the lack of national infrastructure projects. The economic outlook seems bleak, with the GDP estimated to drop by 4% in Q4 2024, further compounding uncertainty”.

Intermodal added that “despite the distractions of the Diwali festivities, the Indian market showed last week some signs of stabilization, backed up by the positive sentiment of the Alang buyers, willing to negotiate and conclude transactions. No change in the local steel prices was reported last week, probably due to Diwali-related market’s hold. Notwithstanding challenges imposed by Inflation driven by gas and fuel prices rise, Indian economy maintains a high GDP growth rate of 6.7% in Q2 2024, projected for a 7% in full year. Last week was struggling for Pakistan market, with very limited activity and a holding pattern for industry players. Scrap steel prices remained unchanged for containerships and slightly declined for tankers and bulk carriers. On the economy front, the anticipated $7bn IMF bailout tranche is at risk, since the government failed to meet certain economic targets. There are still discussions with China for a bailout package providing a sign of hope, although still not finalized and with details to be clarified. The national government proceeded with an interest rate cut of 250bps, aiming to restrain inflation in the levels of 5-7%. This interest rate drop may lead to a rejuvenation of recycling activity” the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide