Ship Recycling Market Picking Up the Pace

The ship recycling has been on a rise last week, with India as the standout performer. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships, said that “India’s ship recycling market is improving, driven by robust local demand anticipated to maintain favorable conditions this month. Bangladesh’s market is stable but slightly declining. Challenges include sluggish demand from steel mills and LC issues from USD shortages, while an influx of Chinese-built vessels has impacted buyer confidence. Pakistan’s market remains unchanged with no new vessel entries and persistent slow activity, though steady recycling rates persist despite diminished construction sector demand, suggesting possible future price drops”.

Meanwhile, according to Best Oasis, “in Turkiye, steel prices are stable, yet ship recycling yards are offering higher prices for immediate vessel delivery due to strong demand. Oil prices have reached a two-month low, notably impacting WTI and Brent crude due to increased supply, lower demand, and negative economic indicators, signaling an extended bearish phase. Contributing factors include a surprise rise in U.S. crude inventories and persistent economic pressures such as high interest rates, which bolster the dollar and reduce oil affordability internationally. These conditions suppress consumer spending and business investment, further curtailing oil demand. The Organization for Economic Co-operation and Development (OECD) has raised its global economic forecast, driven by robust growth in the United States and China. The global economy is projected to expand by 3.1% this year and 3.2% in 2025. However, recovery rates vary significantly, with weaker performance in Europe and most low-income countries, contrasted by strong growth in the U.S. and several large emerging markets”.

Best Oasis added that in India, “the market has shown significant improvement and is currently on an upward trajectory. Trends suggest that the market conditions will remain favorable at least through the end of this month. This upward movement is primarily driven by robust local demand, supporting stronger market performance. India’s steel exports to Europe reached a five-year high of 3.3 million tonnes in FY24, a 65% increase from the previous year. However, India’s market share declined in the UAE and Southeast Asia, with exports to the UAE at a five-year low. Increased competition from Chinese exports has impacted Indian steel mills’ performance in the UAE and Vietnam”, Best Oasis concluded.

In a separate note this week, shipbroker Banchero Costa added that “the Indian Subcontinent has enjoyed a more active week overall, with a number of ‘attractive’ Vessels in terms of LDT, age and delivery in active sales discussions. With Owners seemingly happy to at least test the market on Container and more recently older Handy and Panamax Vessels. In terms of pricing, with healthy competition between Cash buyers, we have seen levels on offer for delivered ships creep up to in excess of $550 LT/LDT mark. Bangladesh remains the primary market taking the lion’s share of tonnage, closely followed by India while after a brief period of strong performance, Pakistan has fallen behind not assisted by most tonnage coming from the East. Lastly, it should be noted that the Turkish recycling market has enjoyed a positive week, with recyclers in Aliaga offering some incredibly strong numbers, in the region $400 LT/LDT in an effort to attract some smaller LDT tonnage, levels not seen in some time”.

Nikos Roussanoglou, Hellenic Shipping News Worldwide