Ship Recycling Activity Still Experiencing Downturn

The ship recycling has remained sluggish throughout the past week. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships, said that “exploring the ship recycling destinations for this week. India’s market continued to show sluggishness, similar to the previous week, with a lack of demand for scrap and vessels. The future of this market remains uncertain, and only time will reveal how it will fare. Meanwhile, Bangladesh’s situation remains unchanged and soft, with no signs of improvement in the next few days. It is only hoped that the issue of LC will be resolved in the coming month. Pakistan’s current market situation is similar to that of the previous week, however, there is a sense of optimism in the economy following the approval of the financial assistance tranche by the IMF”.

According to Best Oasis, “the one particularly encouraging development is from Turkiye, which has seen growth in both the local market and imports. Furthermore, there is a notable demand from buyers in this region for vessels of certain sizes, owing to a scarcity of available tonnage. The World Bank forecasts that the global economy will have its slowest five-year growth period in thirty years. According to the organization’s most recent “Global Economic Prospects” report, global growth is expected to drop in 2024 for the third consecutive year, falling to 2.4% from 2.6% in 2023.

Subsequent to that, there is an anticipation of a little increase in growth to 2.7% in 2025. However, the rate of growth throughout these five years will still be around 0.75% lower than the average rate seen in the 2010s. The organization said that while the global economy remained strong in the face of recessionary concerns in 2023, rising geopolitical tensions would introduce new hurdles in the near future. As a result, most countries are expected to have slower growth in 2024 and 2025 compared to the previous decade. Crude oil prices saw a significant increase after the initiation of attacks by the U.S. and U.K. on military equipment used by Houthi rebels in Yemen. This development has raised fears about the escalation of a conflict in the Middle East, which may potentially cause more disruptions to commercial shipping in the Red Sea”, Best Oasis concluded.

In a separate note, shipbroker Clarkson Platou Hellas said that “this week, a sudden announcement emanated from the Ministry of Environment in Turkey affecting any vessel arriving to Aliaga for ship recycling and causing the ship recyclers to rethink their policies when offering for tonnage. A notification was circulated to all local ship recyclers concerning the import procedure of a scrap vessel and according to this, the new application applies to any vessel, no matter what flag or departure port. It states that prior to arrival and pre-landing. permission from the harbour master of Aliaga, several documents are required, the main one being the IHM report (part 1 only). Obviously, as is always the case with any sudden new directive put into place, there are onward discussions internally if these can be eased at all and time will tell if the recyclers hands are untied. This was basically put into effect by a recent unproven attempt by the local NGO to stop one vessel entering Aliaga for inward clearance because of unsubstantiated reports about the vessel having toxic paints and other hazardous materials, an attempt at which was quickly ended by the Owner providing sufficient proof that no such materials were included. However, their action has since brought into this new procedure. Elsewhere, recycling buyers in the Indian sub. Continent remain starved of tonnage with the year starting on the backburner in Owners minds due to positive freight/charter rates. There was no change in the Bangladeshi Government following last weekend’s elections as the Prime Minister again won a landslide victory and sworn in for a fifth term. What impact this will have on the domestic financial situation remains to be seen”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide