Ship Recycling Market Lacking Interest

The ship recycling market has remained lackluster over the past week, continuing the same trend. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “the market remained quiet, characterized by selective buying and overall cautious sentiments. India was still stagnant with weak demand and inconsistent buyer interest. Discussion of anti-dumping duty took place, but they have yet to bring any tangible impact. In Bangladesh, buyers were looking for smaller vessels to keep the yards running while larger vessels struggled due to foreign exchange constraints, widening the price gap between small and large vessels by USD 30-40 per ton. Pakistan saw some activity with local sales boosting the yards and buyers preparing for green recycling. Türkiye saw a small increase in imports but the overall market remained the same. With no change on the horizon, buyers are cautious, and financial constraints are still affecting the market”.

Best Oasis added that “a strong external driver is needed to break the cycle of stagnation and selective buying. Reports suggest that the administration of the U.S. is mulling over Russia’s sanction lift as a part of diplomatic dealings regarding Ukraine. In the event that this occurs, then the global economy will be affected massively. As it is, energy markets will change significantly as Russian oil and gas exports will increase, resulting in lowered pricing all over the world. At the same time, economies and markets will be disrupted and investments would slow down on alternate sources of energy such as wind and solar power. From a geo-political perspective, these eased sanctions would worsen the U.S.’s relations with European allies who are in support of the sanctions, adding volatility in global trade. There would also be headaches from sanction policy differences for businesses operating out of Europe and the U.S, which would drive up operational costs. The impact may not be directly visible, but the changing trade dynamics can impact ship recycling, thereby affecting the volume for vessel scrapping which would tip the balance for steel prices globally”.

In its latest weekly report, shipbroker Intermodal said that “the major ship recycling destinations remained lacklustre last week, amid limited activity. On a positive note, Pakistani market saw some action, after a stretch of inactivity. In India, the steel market has experienced a slight uptick in demand, but uncertainty continues due to the U.S. 25% tariff on steel imports. This is putting pressure on Indian steel exporters, while the threat of an influx of cheap steel imports remains. Meanwhile, vessel recycling activity remains subdued, with a limited number of available candidates, which could lead to a modest increase in offered prices. Buyers are approaching the market with caution. Overall, market conditions remain sluggish, with minimal movement in both pricing and demand”.

“In Bangladesh, while the influx of remittances has bolstered the country’s reserves, financial uncertainty remains as this increase proved to be temporary. Reserves experienced a significant drop this week due to debt repayments. The scarcity of foreign exchange is impacting the purchasing power of local buyers, leading to a shift in demand towards smaller vessels. Despite some activity in local yards from previous purchases, market conditions remain weak. Economic challenges and political instability persist, fuelled by riots from student-led political groups. Unemployment and inflation continue to affect the economy. The outlook for the ship recycling sector is expected to improve alongside progress in the economic and political landscape. The Bangladeshi Taka remained stable against the US Dollar this week. In Pakistan, the market has shown some signs of activity, following a lengthy period of stagnation. This uptick is mainly linked with selective movements from buyers, in preparation for compliance with the Hong Kong Convention’s regulations. Additionally, India’s current market conditions are benefiting Gadani’s shipyards. However, the country’s challenging economic environment is affecting the ship recycling sector, as constraints in LCs and bank restrictions are preventing buyers from securing ships, despite a slight increase in demand. While the steel market experienced a slowdown during the Ramadan period, this did not significantly affect the ship recycling market. The Pakistani Rupee marginally weakened against the US Dollar week-on-week. In Turkey, the ship recycling market remained flat, without any notable shifts, apart from a subtle increase of import activity. On the economic front, the central bank lowered interest rates to 42.5% from 45%, while inflation showed signs of easing”, Intermodal concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide