Global Supply Chain Disruptions Are Impacting Ship Recycling

Older ships’ decommissioning is being negatively affected by the persisting supply chain disruptions. In its latest weekly report, Best Oasis (www.best-oasis.com), one of the leading cash buyers of ships globally, said that “Dubai recently experienced unprecedented flash floods, causing significant disruptions and challenges for the city known for its robust infrastructure and meticulous urban planning. As the community grapples with the effects of these severe weather events, there is a strong hope for a swift and effective recovery. Efforts are undoubtedly underway to restore normalcy as quickly as possible, and the resilience of Dubai’s residents and authorities is expected to shine through during this recovery phase”.

Meanwhile, “the ongoing Iran-Israel conflict might significantly reshape both the shipping and ship recycling industries by disrupting key routes like the Red Sea. This could prompt shipping companies to withdraw from the region, thereby affecting global supply chains and potentially raising consumer prices. Furthermore, naval actions aimed at securing these routes could shift shipping patterns and delay the decommissioning of older ships, impacting the availability of vessels for recycling. With the increase in operational costs and insurance premiums, shipowners may hesitate to recycle ships, thus decreasing the volume entering the recycling market. Let’s see how this unfolds and its broader implications for the shipping world. The ship recycling markets have displayed varying performances across different regions. India’s market has seen a notable boost, driven by increased demand for scrap steel and non-ferrous materials, further escalated by geopolitical tensions between Israel and Iran.

Meanwhile, Bangladesh’s market is temporarily closed, set to reopen next week, with expectations that resumed operations and high vessel sales could boost market trends. In Pakistan, market activity has stalled due to Eid festivities, continuing previous trends of low activity and weak demand. There are ongoing efforts to address smuggling, which could potentially revive the market. Turkiye also reports stagnation influenced by the Eid celebrations, with no significant changes observed in the market conditions from the prior weeks”, Best Oasis said.

In a separate note, shipbroker Banchero Costa added that “while the year high levels of $600 LDT / LT achieved a couple of week ago for the Sinokor controlled container Vessel have not been breeched nor really tested this week, it seems activity is continuing to bubble in the Indian sub-continent demolition markets. In Bangladesh, LC’s (Letters of Credit) are available and it continues to be the choice market especially from tonnage from the East that is not subject to Green / HKC requirements. In India, sentiment remains positive. Elections are now under way with results to be announced on June 2nd, with President Modi party expected to win another terms local fundamental should not be adversely effected. Lastly, a quieter week in the Pakistani market which has struggled to keep up with neighbouring counterparts”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide