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Ship recycling : A ray of hope on the horizon

Ship recycling : A ray of hope on the horizon

The ship recycling industry has faced a prolonged period of reduced activity, but there is hope on the horizon according to shipping experts. In their most recent weekly report, shipbroker Clarkson Platou Hellas pointed out that with September’s arrival, there is growing anticipation that this month might witness an uptick in the supply of ships available for recycling. Vintage Far Eastern-controlled dry bulk vessels are starting to come up for sale or arrive at recycling yards after being sold off-market.

Clarkson Platou Hellas reported that Pakistan has reentered the ship recycling arena, with a bulk carrier being sold for around USD 545 per light displacement ton (ldt). This marks a significant increase from the previous similar sale at USD 525.00 per ldt. Some critics argue that this could be an exceptional price for a specific recycler with easy access to a Letter of Credit. Meanwhile, several units are either arriving or awaiting delivery at Chattogram, Bangladesh. However, challenges related to domestic payment availability persist, raising questions about whether these vessels will eventually be scrapped locally or if cash buyers will redirect them elsewhere.

Ship recycling weekly market report by Best Oasis 4th September

While recycling volumes are currently on par with 2022 levels, they remain notably below the 10-year average. Nevertheless, signs suggest that this trend may soon change, especially as the winter months approach, potentially bringing more vessels to recycling yards. The primary concern now is whether the Indian subcontinent destinations can address their financial constraints to accommodate the anticipated increase in supply.

In a separate report this week, GMS, the world’s leading ship cash buyer, noted a glimmer of optimism in the ship recycling markets of the subcontinent. Several units have reportedly been concluded with enthusiastic cash buyers at firmer price levels. These buyers seem eager to secure tonnage ahead of the monsoon season’s end, potentially meeting the forthcoming increase in demand as the traditionally busy year-end and Q4 period approaches. Notably, some sales have been confirmed in Pakistan, with L/C approvals becoming available for tier-1 recyclers in Gadani, where capacity and demand have been steadily growing throughout the year. In India, positive spikes in domestic steel plate prices were observed, and upcoming announcements on infrastructure projects during the G20 nations conference are expected to boost the country’s economy and global presence.

Ship recycling market facing challenges

Global steel plate prices have recently risen by approximately 2%, driven by Chinese measures aimed at supporting the housing market and the Renminbi currency. However, in Bangladesh, plate prices have remained stagnant, with no significant offers from local recyclers, partly due to difficulties in balancing foreign currency reserves and stricter limits on opening L/Cs. End buyers in Bangladesh continue to hold out for bargain deals at around USD 450/LDT, but with India and Pakistan’s markets rebounding and the fourth quarter’s positive sentiments prevailing, Bangladesh may find itself on the sidelines until local conditions improve. Finally, the ship recycling market in Turkey has remained stable and unchanged since the previous week, according to GMS.


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