Ship Recycling: India a Bright Spot

The ship recycling market is showing some early signs of life, with the Indian market emerging as a bright spot. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading global cash buyer of ships said that “the ship recycling industry displayed varied dynamics across different regions. In India, the market experienced a noticeable improvement, particularly in the local scrap market, which brought a wave of optimism. However, the rapidity of this change also introduces uncertainties about its lasting impact. Bangladesh’s market remained stable yet slow, as recyclers took a cautious stance, opting to wait due to potential future declines in prices, which stifled market activity”.

“Meanwhile, Pakistan’s sector did not see significant shifts in demand or pricing, but the recent approval of a substantial IMF aid package might set the stage for more positive changes in the near future. Turkey’s market mirrored last week’s stagnation, with little to no change in imports or local activity. Overall, while there are pockets of optimism, such as in India, the global ship recycling market generally continues to navigate through a phase of cautious optimism and relative inactivity, requiring careful monitoring and strategic adjustments moving forward. The outlook for the global economy, as highlighted in the World Economic Forum’s September 2024 Chief Economists Outlook, suggests limited improvement ahead. A majority of economists (54%) anticipate the economic landscape to remain stable over the coming year, while 37% predict further deterioration. Despite some encouraging signs, including reduced inflation and resilient global trade, the report warns that any stabilization is occurring at one of the weakest levels seen in decades”, Best Oasis concluded.

In a similar weekly report, shipbroker Intermodal also noted that “the ship recycling market showed mixed dynamics last week, with India leading the way in terms of activity, while other regions continued to face challenges. Global economic conditions and geopolitical tensions have kept the market on edge, contributing to mixed trends in key recycling destinations. In India, local steel prices firmed and sentiment was upbeat following the Chinese stimulus package. As a result, scrap prices offered by recyclers also increased. Steel demand in the region is showing signs of increasing, adding to the positive sentiment. As for the steel industry, the ISA believes that more Chinese steel is heading to China after the US imposed a 25% tariff on Chinese steel In Pakistan, the market is weak and the steel market is not supportive as both steel and scrap prices are falling. The market is basically non-existent as there is no available tonnage.

The country has managed to secure a $7 billion loan from the IMF to help with the country’s financial problems, while the $1.1 billion will be released immediately. No major developments are expected due to the lack of available tonnage. Similarly, steel demand in Bangladesh is showing no signs of recovery, although steel prices have risen slightly. Prices offered by recyclers are falling in the absence of demolition activity. The country has also secured a $3 billion loan to help ease foreign exchange difficulties. In addition, the Asian Development Bank set the country’s growth at 5.1% for 2024-25, down from 6.6%. In Turkey, demand is weak and steel prices are falling. Despite this, recyclers offered higher prices. On the macro side, the country raised the reserve requirement ratio. For the short term it was raised from 12% to 15%, while for the long term it was raised from 8% to 10%. In addition, the country decided to introduce a minimum corporate tax rate of 10% for all companies from 2025 onwards”, the shipbroker concluded.

Nikos Roussanoglou, Hellenic Shipping News Worldwide