Ship Recycling Hit by Geopolitical Unrest

Geopolitican uncertainty has further compounded the overall subdued activity in the ship recycling market. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “this week, the ship recycling market remained in a state of stagnation across all major destinations, with no significant developments impacting pricing or demand. India remained under pressure as the strengthening U.S. dollar against the rupee added further strain, keeping market sentiment locked in a repetitive cycle of inactivity. Bangladesh saw no shifts in market conditions, with prices readjusting in line with local trends but failing to generate fresh interest. Pakistan’s market followed its familiar, silent pattern, showing no signs of change or renewed sentiment. Meanwhile, Türkiye mirrored last week’s trend, maintaining a steady yet uneventful outlook”.

According to Best Oasis, “overall, the market appears to be in a holding pattern, waiting for a catalyst to break the cycle. With no major shifts on the horizon, all eyes remain on external factors that could reignite momentum. Global crude steel production in January 2025 experienced a 4.4% decline compared to the same month in the previous year, reaching approximately 151.4 million tonnes, as reported by the World Steel Association. China’s steel output saw a notable drop of 5.6%, while India continued its upward trajectory with a 6.8% increase. The United States recorded a modest rise of 1.2%, whereas Japan’s production contracted by 6.6%. Among different regions, the Middle East experienced the sharpest decline at 15.3%, while Russia and other CIS nations, including Ukraine, posted a slight growth of 1.4%. Despite some countries reporting increases, the overall global steel output declined, largely driven by reduced production in China and weaker manufacturing activity across multiple regions”, it concluded.

In a separate report, shipbroker Intemodal said that “March has started with minimal change from February, marked by subdued activity and cautious market sentiment, heavily influenced by ongoing geopolitical uncertainties. In Bangladesh although there are some indications of a gradual recovery, the economy continues to encounter difficulties, including rising living costs, inadequate government spending, high unemployment and weak investment activity. On the political front, the students that led the protests that resulted in the removal of PM Sheikh Hasina, formed a new political party planning to participate in the upcoming elections expected by yearend. Domestic steel demand remains due to declined construction activity and a lack of government projects, while local steel plate prices have slightly declined. In ship recycling sector, market activity is expected to remain limited in the next 2 weeks, affected by Ramadan, limited vessel availability and uncertainty.

On the regulatory front, while there have been delays, upgrading works have begun to align yards with the HKC, set to come into effect this summer. This is necessary for yards to obtain SOC certifications from accredited classification societies, ensuring they meet required standards to continue operations beyond the second quarter of 2025. In India, the economy appears to be on track, bolstered by growing public and private spending. The GDP growth rate has surpassed 6% and the recent budget, which includes tax reductions for middle and lower income households, is expected to further improve economic conditions and confidence. However, the ship recycling market remains stagnant, with little change from last week due to a shortage of available tonnage and uncertainty stemming from the evolving US tariff situation. Additionally, the weakening of the Indian Rupee against the US Dollar is eroding buyers’ purchasing power. On a positive note, the steel market has shown signs of improvement, driven by stronger demand. In Pakistan the focus for Gadani recyclers is on aligning yards with the HKC regulations. Presently, 11 yards are progressing with the necessary updates and actions, with 6 of them nearing compliance with the HKC requirements. Aside from this, there has been little change in the market, with activity remaining muted. Nevertheless, Pakistani Rupee remains stable and there is some interest from buyers to negotiate on ship recycling candidates, especially of smaller sizes”, the shipbroker concluded
Nikos Roussanoglou, Hellenic Shipping News Worldwide