Ship Recycling: Stagnation is the Norm

The ship recycling market is still in bearish mode, despite the fact that cash buyers are looking for more demo candidates. In its latest weekly report, Best Oasis (www.best-oasis.com), the world’s leading cash buyer of ships, said that “the ship recycling markets across India, Bangladesh, Pakistan, and Turkiye are currently navigating through varying degrees of stagnation and cautious trading. In India, the market is experiencing a downturn with a significant drop in demand for vessels and scrap materials, signaling a market stagnation. Bangladesh’s market mirrors last week’s cautious sentiment, with low transaction volumes and a scarcity of deals, as recyclers struggle to find vessels at desired price points, and owners await higher offers. Pakistan sees a continued decline in demand, affected by the slowdown in the steel and construction sectors. Meanwhile, Turkiye’s market is on a downward trajectory, with import prices falling by 10 USD, though efforts are being made to stabilize the market with expectations of further softening in prices soon. This collective snapshot underscores a period of adjustment across the major ship recycling destinations, reflecting broader economic challenges and sector-specific dynamics. In January 2024, there was a 1.6% decrease in global steel production, totaling 148.1 million tons when compared to January 2023”.

Best Oasis added that “contrasting with December 2023, January 2024 witnessed a significant increase in steel production by 9.1%. The forecast from energy research firm anticipates a notable surge in worldwide oil demand, projecting an increase of 1.9 million barrels per day (bpd) in 2024. This projection closely mirrors the estimates provided by the Organisation of the Petroleum Exporting Countries (OPEC) for the same period, highlighting a consensus among industry experts on the expected growth in global oil consumption”

In a separate report, shipboker Clarkson Platou Hellas said that “we have seen a slight upturn in price indications this week, most likely due to the dwindling supply of candidates. Reports suggest from local sources that only one or two new vessels have arrived at the official anchorage for recycling clearance in Alang, and no new units have arrived at Pakistan or Bangladesh. This certainly confirms the views that ship owners are making hay on their tonnage whilst the sun shines, the sun being the improving freight/charter rates and ever-increasing second-hand values, even on older units, due to the ongoing global dynamics”, the shipbroker said.

Banchero Costa added in a similar note that “despite hungry End and Cash Buyers, it remains slim pickings across the demolition markets with a handful of 30 year old plus small LDT Vessels been sold. With Capesize spot rates pushing near USD 35K a day with Panamax, Supra and Handys also on a positive trajectory it is of little wonder that Owners are not being swayed to the scrapping route.

Local fundamentals across the subcontinent neighbours remain mostly positive, with local currencies holding up well against the US Dollar and only slight fluctuations to local steel plate prices. On pricing both Bangladesh and Pakistan continue to take the lead with little between them, therefore Sellers having a viable delivery option on either tonnage coming from the East or West”.
Nikos Roussanoglou, Hellenic Shipping News Worldwide