Challenging Conditions Ahead for the Ship Recycling Market

The ship recycling market is set to face a challenging few weeks, with limited activity. In its latest weekly report, shipbroker Clarkson Platou Hellas said that “some unexpected news circled in the market this week confirming that the oil trade related sanc-tions imposed by the U.S. on Venezuela have been lifted for an initial six months resulting in many questions to be asked in the recycling industry as to tonnage supply for the larger tanker units. However, amid discussions, we do not expect to see a large volume of these units to be diverted to the recycling shores as whilst some of this older fleet will not continue to be used due to the current lifting of restrictions on the Venezuelan oil trade, there is the possibility that some of these vessels may find alterna-tive employment in other non-mainstream trades which will be something to watch over the coming weeks and months.

Source: Clarkson Platou Hellas

Back to the current market and whilst there remains the lingering scenario with the financial restrictions in both Pakistan and Bangladesh, and there has been some negative feel creep into the Indian shores. The Indian scrap import market has witnessed a decline amid sluggish domestic steel demand and internal cash flow problems. Whilst scrap prices have fallen, sales activity remains limited, and this current scenario creates challenges for the industry”, Clarkson Platou Hellas concluded.

Source: Allied shipbroker

In a separate note, shipbroker Allied said that “the scarcity if transactions has given the market a sluggish feeling lately. There is an ongoing sense that the overall market is experiencing some slight pressure amid the decreasing trajectory in scrap prices in some key recycling destinations. More specifically, the situation in India seems slightly bearish at the point, with local steel prices gradually declining and leaving local participants with uncertainty over whether to compete with recent high levels. In both Bang-ladesh and Pakistan, the ongoing financing difficulties continue being a significant obstacle, having already resulted in less ton-nage being concluded there over the past few weeks. Further compounding the situation, the recently improved sentiment across many sectors will likely result in a shortage if tonnage in the near term”, the shipbroker said.

Source: GMS

Meanwhile, in its latest weekly report, GMS (, said that “this week, all of the major recycling markets seemed to be deteriorating at the same time as steel plate prices in India declined for a second straight week, further deteriorating Indian sentiments and making Alang Buyers increasingly hesitant to offer firm once again. Additionally, as the Israeli conflict rages on in the region, not only are economic pundits predicting oil prices to rise in the near future, but it is also seeming to affect the forex value of recycling nation currencies as other than the Indian Rupee, all of the other currencies noted a simultaneous devaluing against the U.S. Dollar this week. Ongoing difficulties in obtaining the relevant financing / L/C approvals also continues to pose a significant problem for recyclers in both Pakistan & Bangladesh and this has led to a minimal number of vessels being concluded into both markets over the past several weeks. With India leading the way during this time, several container units were concluded into Alang at fantastic prices (one even breaching the magical USD 600/LDT mark) as a result. Meanwhile, many in the industry believe prices may have peaked and much of the chatter at the Tradewinds Ship Recycling Conference in Singapore last week, circled around prices and sentiments cooling down towards the end of the year, especially as some of the frantic buying seemingly concludes and the expected Diwali price cooling starts to loom larger. Finally, Turkey also slips again this week as the Lira finally breaches past TRY 28, and on the back of slipping plate prices (both import and local steel), Turkish levels were seen slipping by about USD 10/MT themselves, dipping Aliaga below USD 300/MT for dry units.

Accordingly, it is unlikely to be the busy conclusion to 2023 that many were anticipating (especially based on recent sentiments) and expectations are that the next sales will likely take place at similar (if lucky) or (most likely) low-er levels. An empty sale chart also suggests that a pickup in Dry Bulk and Container charter rates will likely keep vessels away from the beaches a little longer. However, this is only delaying the inevitable, of what is expected to be a busy 2024 (at the very minimum) for ship recycling”, GMS concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide

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