Ship Recycling Still Lackluster
According to Best Oasis, “overall, the global ship recycling sector is navigating through turbulent waters, with stakeholders waiting for clearer signals and more stable conditions before taking decisive action. The industry, much like a ship in rough seas, is struggling to find its course amidst challenging economic conditions and regulatory pressures. Japan-based NYK and Oono Development have signed an MoU to jointly explore the commercialization of responsible ship recycling in Japan. The collaboration seeks to develop an environmentally friendly method for dismantling ships and offshore structures, converting them into recyclable materials such as steel scrap, with Oono Development’s dry dock as the operational base. The European Recycling Industries’ Confederation (EuRIC) has launched the Ship Recycling Working Group (ESRG) to address key challenges in EU ship recycling. ESRG’s priorities include creating a level playing field for EU-listed yards, simplifying bureaucratic processes, expanding the regulation’s scope to cover all vessel types, strengthening control mechanisms for proper certification, and reinforcing the EU ship recycling sector by reducing the number of end-of-life vessels leaving the region”, it said.
In a separate weekly note, shipbroker Intermodal also noted that it was “another subdued week in the recycling market as relatively high freight rates and continued interest in older tonnage keep vessels out of the scrap yard. In India, the subdued market continues with local recyclers still reluctant to make any moves and as a result recycling prices continue to fall. Weak steel demand is the main reason for this, with construction activity remaining sluggish even after the monsoon season, when many players were expecting a recovery. Tariffs of 30% on imported Chinese steel have pushed up local steel, while the local currency is also on an upward trend. There is still optimism that steel demand will pick up and if this happens, it could support the scrap market. In Pakistan, the industry has also been hit by cheap Chinese steel imports, with local recyclers unable to compete and steel demand remaining low. Although local steel prices have remained relatively stable, the lack of demand has resulted in lower recycling prices. On a brighter note, the country is expecting some construction projects to start, providing some hope to the market.
In Bangladesh, recycling prices declined and steel prices remained under pressure, resulting in recyclers staying away from the market. Similar to India, post-monsoon construction activity is expected to revive the sector. In addition, regulation is adding to recyclers’ headaches as the deadline for compliance with the Ship Recycling Facility Plan (SRFP) is less than a month away and the issuance of No Objection Certificates (NOCs) is becoming more stringent. In terms of fundamentals, foreign exchange reserves have fallen by 20 billion, adding to the country’s woes. In Turkey the market is stagnant as no ships are being sold for scrap. The local steel market is affected by slightly higher demand as local steel prices remain subdued, leaving recycling prices stable. The country’s battle with inflation continues and although it is on a declining path, the central bank has left the interest rate unchanged at 50%. The slightly improved economic picture in Turkey has not yet translated into a buoyant recycling industry”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide