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Political Climate Takes a Toll on Ship Recycling

The ship recycling market was in a downturn over the past few days, as a result of the recent elections in India, while a further slowdown is expected in the coming days, because of the Eid holidays. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “in the global ship recycling market, various destinations are exhibiting distinct trends. In India, the market is experiencing a notable decline over the past few days. This downturn is attributed to the recent elections, where the outcomes did not align with the anticipated majority, leading to market instability and a downward trend in steel prices expected to continue in the short term. Meanwhile, Bangladesh’s market has seen no changes from the previous week. The expected increase in import duties did not materialize, leaving prices and duties unchanged. Recyclers had anticipated a rise and acquired vessels in advance, but now future market directions depend on demand fluctuations. Pakistan’s market has been relatively quiet, with a slight increase in steel prices over the past week. Demand for vessels at lower levels remains, as participants await the federal budget announcement on June 12.

Source: Best Oasis

Best Oasis added that “market activity is expected to further slow around mid-June due to the Eid holidays. In Turkiye, the steel market is facing weakened demand, yet recycling yards are seeing increased interest due to a limited supply of vessels for scrap. Oil prices are declining as bearish sentiment grows. This trend is driven by OPEC+’s announcement, which failed to meet market expectations, to extend voluntary production cuts only until Q3 2024 and maintain base cuts through the end of 2025”.

Meanwhile, in India, “the local market is experiencing a noticeable decline, with prices dropping by approximately INR 1,000 (equivalent to about 12.27 USD). This downturn has been observed over the past few days and is expected to continue into the upcoming week. The recent elections have played a significant role in influencing market sentiments. The outcomes, which did not align with the anticipated majority seats, have contributed to the current instability and downward price trend in the steel market. Given the current trends and market responses to the political climate, market is expected to maintain its downward trajectory in the short term. The unexpected results of India’s elections highlight the volatile nature of its politics, with the ruling Party failing to secure a parliamentary majority, falling short of their 370- seat target”, Best Oasis concluded.

Source: Best Oasis

In a separate note, shipbroker Banchero Costa commented that “with little to report on in the way of interesting sales both the outcome of India’s elections and Bangladesh budget (for 2024 – 2025) have been the focus for the Sub Continent recycling markets in the past week. As expected President Modi has being re-elected to govern as India’s Prime Minster for a 3rd term. However his Hindu nationalist Bharatiya Janata Party, which won by landslides in 2014 and 2019, failed to secure a majority to govern on its own this time round but though his National Democratic Alliance coalition with the BJP and other parties won enough seats for a slim parliamentary majority.

Source: Banchero Costa

While local global markets were somewhat spooked by the idea of coalition government, it seems to have had very limited impact on its recycling industry. As such fundamental and prices remain steady, with a lack of exciting tonnage on offer really being the main issue hindering any real scrapping volume. In Bangladesh the fiscal budget for the year ahead has again had limited impact however local sentiment with end Buyers in Chittagong has been weak in the last few week. However we note a 1999 blt Aframax, namely the MT SERANO II (abt 106k DWT / 16290 LDT) has been sold to for recycling for an undisclosed price”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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