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Global Ship Recycling Markets in a Holding Pattern: Await-and-See Approach Prevails

Global Ship Recycling Markets in a Holding Pattern: Await-and-See Approach Prevails

Global Ship Recycling Markets in a Holding Pattern: Await-and-See Approach Prevails

The global ship recycling industry is currently experiencing a period of sluggish activity, according to a report by leading cash buyer GMS. This week saw minimal sale and purchase agreements, as well as limited local arrivals and deliveries at shipbreaking yards around the world.

Subcontinent Recyclers Cautious as Monsoon Approaches

Ship recyclers in the Indian subcontinent, particularly India and Bangladesh, are adopting a wait-and-see approach as the monsoon season nears. This cautious stance comes after a period of increased activity, where most subcontinent yards have acquired significant tonnage in recent months.

This pause in activity might be coincidental with a general strengthening of currencies in major ship recycling destinations. Additionally, steel plate prices in Bangladesh have finally begun to see some trading activity. However, overall steel plate inventories in both Bangladesh and India have decreased throughout the week.

Uncertainty from Recent Events Dampens Market Sentiment

GMS reports, “The recent budget announcements in Bangladesh and Pakistan have had negative impacts on both vessel availability and overall market sentiment in those locations.” They add, “India is also experiencing mixed feelings regarding its upcoming budget, with unexpected election results significantly impacting local confidence in the country’s immediate economic future.” The report concludes, “We can only hope that with the announcement of India’s budget, the most significant market disruptions of 2024 will finally come to an end.”

Turkish Market Remains Stagnant

Despite a surge in local vessel offerings earlier this year, the Turkish ship recycling market continues to be sluggish.

Price Adjustments and Tonnage Shortage Offer Temporary Relief

A slight decrease in recycling prices by approximately USD 20-25 per Light Displacement Ton (LDT) in subcontinent markets has provided some unintended relief for recyclers. However, the ongoing shortage of sizeable bulk carriers, tankers, and container ships continues to limit the availability of vessels for dismantling. This, combined with the approaching monsoon season in the subcontinent and the summer holiday season elsewhere, could lead to a period of continued slow activity in these key recycling regions.

In essence, the global ship recycling market is currently in a holding pattern. With ongoing uncertainties, a lack of available tonnage, and seasonal factors, the industry may experience a period of reduced activity in the coming months.

This lull coincides with the approaching monsoon season in the Indian subcontinent, a major player in global ship recycling. Many recyclers in this region are adopting a “wait-and-watch” approach before acquiring new ships. This cautious strategy stems from a recent period of strong activity, where subcontinent yards have already secured a substantial amount of tonnage for dismantling.

However, this temporary pause may have some unintended benefits for recyclers. Firstly, currencies in most ship recycling destinations have strengthened recently. Additionally, steel plate prices in Bangladesh, another key player, have finally begun trading. Despite these positive signs, overall steel inventory levels in both Bangladesh and India have declined throughout the week.

Political developments are also impacting the market. GMS reports that both Bangladesh and Pakistan recently unveiled national budgets, and the content of these budgets has dampened the enthusiasm of vessel sellers and created a negative sentiment within these markets. India is also approaching its budget announcement with a sense of uncertainty, as unexpected election results have cast doubt on the country’s immediate economic future. GMS expresses hope that once the Indian budget is finalized, the market will achieve a degree of stability for the remainder of 2024.

Elsewhere, the Turkish ship recycling industry remains stagnant, despite a surge in locally available vessels earlier this year.

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