Slow season for the Ship Recycling industry

Global Ship Recycling Market: A Year in Review and 2024 Projections

According to sources, the ship recycling market remains subdued, with Indian recyclers showing remarkable activity in contrast to their Bangladeshi and Pakistani counterparts. Shipbroker Clarkson Platou Hellas has noted that as the Autumnal season sets in, the Bangladeshi and Pakistani recycling activities remain lackluster, while Indian recyclers exhibit a positive mood. Several factors contribute to India’s upbeat sentiment, including financial stability, government support for the local infrastructure and construction industry, and the potential for more tonnage to enter the market for green recycling. Most Indian yards are now compliant with the Hong Kong Convention (HKC). In contrast, Bangladesh faces challenges with Letter of Credit limitations and tougher exchange rates, while Pakistan’s recyclers struggle to make profits due to currency fluctuations.

Allied Shipbroking also reports that Indian breakers are outcompeting their Sub-Continent neighbors as they continue to bid higher, albeit below the previous week’s ‘Fortune Trader’ sale price. The sale of the ‘MSC Jasmine’ for $580/LDT indicates a healthy market. The sale marks the 12th MSC boxship sale for recycling this year, potentially benefiting Indian yards, which lead in green-processing capacity. Furthermore, the sector experiences one of its busiest recycling weeks this year, marked by four tanker sales. However, despite a promising week, the ship recycling sector remains behind 2022’s scrapping levels, with vessels on average being 4-5 years older than last year. The slowdown in tanker earnings may lead to an increase in container and bulker vessels for demolition.

GMS, the world’s leading cash buyer of ships, reports that India’s strong presence continues to boost the sub-continent markets, even as the industry enters the fourth quarter of the year. While Indian activity may decrease during Diwali holidays, Pakistan and Bangladesh could become more active in the coming months. A resurgent Pakistani market witnessed a decline as buyers who secured L/C banking limits quickly filled their plots in August. Bangladesh, on the other hand, remains passive, with unrealistic price expectations below USD 500/LDT. Turkish buyers, however, are offering firm prices for rare units in the market.

The supply of containers remains strong, with Alang’s pricing encouraging owners to sell their vessels near or above the USD 600/LDT mark. Dry Bulk charter rates have slightly improved recently, but the supply of vintage 90s built and older Dry vessels is expected to strengthen toward the end of the year and into 2024.

In summary, the ship recycling market is experiencing differential activity across the sub-continent, with Indian recyclers maintaining a positive outlook due to several supportive factors. In contrast, Bangladesh and Pakistan face limitations that hinder their market participation. The sector’s performance in 2023 lags behind the previous year, and a potential shift in the types of vessels available for demolition may occur due to changing market dynamics.

Source: Hellenic Shipping News, Clarksons, Allied shipbroker, GMS

Source Hellenic Shipping News
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