Ship Recycling Market Still in Limbo

The ship recycling markets have remained in limbo over the past week. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “the ship recycling markets across the major destinations continued to face a challenging environment. In India, the market remains sluggish with low demand and limited tonnage availability, and no signs of recovery expected until after the monsoon season. Bangladesh is experiencing similar issues, with hesitant buyers and a cautious market approach contributing to the ongoing slump. Pakistan’s market has been subdued due to market closures from strikes, holidays, and monsoon rains, keeping buyer interest minimal. In Türkiye, while conditions are stable, negative sentiment and limited vessel offerings continue to weigh on the market, prolonging the downturn. Ship recycling activity remains subdued as shipowners opt to keep older vessels in operation rather than recycling them, driven by high market rates and profitability. Geopolitical factors, including Russian sanctions and strong demand for seasoned ships, have further dampened interest in recycling, particularly in the tanker and gas sectors. Despite some fluctuations, overall recycling levels have significantly declined, reflecting a broader trend where maintaining older vessels is more profitable, reshaping the dynamics of the ship recycling industry”.

In a separate report, shipbroker Banchero Costa added that “a negative sentiment continues across the Indian sub-continent demolition destinations this week. In Bangladesh, a lack of foreign currency is making life difficult for importers and eyes both domestically and internationally remain on the interim government to provide some direction and restore confidence to the markets.

While in India, end Buyers remain cautious and waiting for the occasional HKC complaint only tonnage to be marketed in which they have little buying competition from their neighbours (for now at least). Lastly, in Pakistan, Gadani based buyers remain off the pace with little appetite to compete what limited tonnage there is. Little to report in sales this weeks aside from a vintage Indonesian controlled Chemical tanker, namely the MT MEDELIN EXPO (abt 5270 LDT) achieving a impressive $653 per LDT due to having a high levels of stainless steel on board”.

In an earlier report, shipbroker Xclusiv had noted that “overall, the ship recycling industry is navigating a tough period with widespread uncertainty and limited prospects for immediate improvement. India’s cabinet is soon expected to vote on a transformative shipbuilding policy aimed at strengthening the country’s role in the global shipbuilding and ship recycling sectors. The proposed policy includes a Recycling Credit Note Scheme that offers fleet owners a 40% credit on the scrap value for ships dismantled in Indian yards. This incentive could significantly shift industry dynamics, making India a major hub for ship recycling and potentially drawing business away from other countries. By linking ship recycling with new vessel construction, the policy is designed to create a sustainable cycle, boosting both sectors and fostering substantial growth and innovation in India’s shipbuilding industry”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide