Ship Recycling Could Gain Momentum as 2024 Approaches its Closure

Ship recycling activity could post an increase during the final weeks of 2024, with more buying activity on the horizon. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “this week, recycling markets across regions like South Asia and Turkiye remained largely subdued, showing mixed trends. In India, a modest post-festival demand boost lent minor stability, though its persistence is uncertain. Bangladesh saw limited demand and minimal transactions, with prices holding steady but soft as many steel mills face challenges that restrict operations. Pakistan’s market stayed quiet, constrained by limited local scrap supply and reliance on imports. Turkey’s market was almost at a standstill, with minimal movement and no signs of near-term change. As year-end approaches, buying activity could see an uptick in November and December, potentially influencing price dynamics”.

Meanwhile, “a period of potential change may be on the horizon. With Donald Trump’s return to the White House, the stage is set for possible economic shifts. His agenda includes tax cuts aimed at boosting domestic production, high tariffs to discourage outsourcing, and a shift from green energy back to fossil fuels. These policies could bring renewed momentum to the economy, but they also carry the risk of rising prices and inflation, which may lead the Federal Reserve to keep interest rates high. Trump’s push for stricter immigration measures, including an expanded border wall and increased deportations, could also affect labor dynamics. The impact of these bold actions remains uncertain, leaving America on the edge of a new economic chapter full of possibilities —and the ripple effects may well be felt around the globe, potentially reshaping international trade dynamics, energy markets, and geopolitical alliances”, Best Oasis said.

In s separate report, shipbroker Intermodal also noted that “this past week, the ship recycling markets across key South Asian regions maintained a largely subdued performance, impacted by fluctuating steel demand, economic volatility, and currency depreciation. In India, the market saw minor support from post-Diwali demand, yet remained cautious with limited transactions. Despite a slight increase in local steel prices, recyclers are constrained by tight liquidity due to central bank policies. The Indian rupee touched a record low against the dollar, reflecting ongoing economic pressures. The Reserve Bank of India’s stance against interest rate cuts until Q1 2025 continues to hinder market activity, as recyclers adopt a wait-and-see approach amidst modest improvements. In Bangladesh, there was a notable yet cautious shift as cash buyers resumed interest, pushing vessel prices slightly upward. However, ongoing financing limitations, exacerbated by L/C issues, limit buyer participation, with deals focused on larger tonnage.

Recent regulatory adjustments by the central bank to ease pressure on select banks could gradually improve transaction volume, though demand remains low due to broader economic instability. Steel prices rose, but sustainability remains uncertain given the slow construction sector. Pakistan continued to face significant constraints, with market activity largely stagnant. Steel demand is hindered by local and imported competition, while limited scrap supply keeps prices subdued. Although recent economic measures, including an interest rate cut, aim to revive business activity, recyclers are reluctant to make new acquisitions without stronger economic signals. Discussions of financial support from China and the IMF offer a glimpse of potential market stabilization, though these measures have yet to impact recycling transactions directly. In Turkey, market conditions remained at a standstill, with muted demand and limited scrap availability. Despite modest price adjustments for local and imported steel, the market outlook remains conservative, with no significant change expected as winter approaches”, Intermodal said
Nikos Roussanoglou, Hellenic Shipping News Worldwide