Ship Recycling Market in Sea of Calm

The ship recycling market has remained in a sea of calm, with low activity. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “this week in the recycling markets was characterized by stability and subdued activity, with some hope for improvement. In India, the market and sentiment remained unchanged, with optimism for a year-end boost as December trends often bring increased activity.

Bangladesh experienced a sluggish market but noted a small price increase due to a two-month deadline extension for yard owners, prompting slightly higher offers from recyclers. Pakistan stayed stagnant, with no activity or progress throughout the week. In Turkiye, the downturn persisted, with weak demand and low activity continuing from the previous week”.

Best Oasis added that “while significant improvements were absent, there is some anticipation of better trends in the weeks ahead. The global economic landscape is on the verge of facing heightened uncertainty as the United States considers imposing 100% tariffs on BRICS nations over their plans to develop a new currency to challenge the U.S. dollar’s dominance. This move could significantly escalate geopolitical tensions and reshape global currency dynamics. The BRICS bloc has been actively advancing “de-dollarisation” strategies to reduce reliance on the dollar and counter Western financial influence. Discussions at the 2022 BRICS Summit highlighted plans for an “international reserve currency” backed by a basket of BRICS currencies and potentially precious metals, signaling a transformative shift in the global financial order”.

In a separate note this week, shipbroker Intermodal added that “the market experienced another week of subdued activity, with some hopes for a slight recovery as we approach the end of the year. In Bangladesh, market conditions remain consistent with those of last week. While there has been an improvement in demand for vessel recycling, a shortage of available tonnage persists. Local buyers are closely monitoring sector trends and outlook for the upcoming year. Moreover, the government has provided an extension until the end of January to the shipyards to make the necessary improvements and comply with the HKC recycling standards. As a result of these developments, the prices offered for recycling have experienced a modest increase. In other news, as part of the government’s efforts to stabilise the banking system, despite concerns about rising inflation, the Central Bank has injected newly printed currency into six banks facing liquidity distress.

In India, GDP growth continues to slow in 2024, from 7.8% in Q1 to 5.4% in Q3 2024, falling below expectations. Inflation is expected to ease in November, mainly due to a moderation in food prices. The steel industry faces competition by Chinese steel exports either directly, or indirectly through trade agreements with third countries. In a bid to shield the sustainability of the local market, the Indian Ministry of Steel has suggested the implementation of a 25% tariff on certain steel imports. The depreciation of the Indian Rupee against the US Dollar has placed Alang recyclers in a weakened negotiating position. The market remains subdued, with hopes for an uptick in activity by yearend. Recycling prices have held steady compared to the previous week. In Pakistan, the economy faces challenges, amid the country’s weak financial position and the efforts of the government to deal with the $26 billion debt servicing obligation in the current fiscal year. The renewal of the $3 billion Saudi Arabian deposits has provided some liquidity. The recycling market continues to be in a dormant state, without any activity or progress.

 Both the economy and the recycling sector recovery prospects are linked to the expected finalisation of the IMF bailout package within Q1 2025. In Turkey, inflation rate improved in November, marking the sixth consecutive month of gradual disinflation. Turkish Lira continued to retreat against the US Dollar, falling to 34.79 USD/ TRY at the end of last week. The recycling sector faces downwards pressures, with weak fundamentals. Vessel recycling prices decreased since last week, in the range of $10/ldt”, the shipbroker concluded.