The ship recycling market has been sluggish over the past week, but sentiment could be shifting optimistic soon. In its latest report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “the ship recycling markets across India, Bangladesh, Pakistan, and Türkiye continue to face a mix of stagnation and cautious optimism. In India, the market remains stagnant with no significant movements expected soon, primarily due to limited ship availability. Despite challenges in selling recycled materials locally, reduced prices have allowed for some exports outside Gujarat, offering a slight improvement in demand. Bangladesh shows a strong demand for medium-sized vessels, but financial hurdles, including stricter banking policies on Letters of Credit, significantly hinder transactions. Administrative delays have also increased, affecting the efficiency of vessel purchases. In Pakistan, market conditions are slowly stabilizing with recyclers actively seeking buying opportunities. However, the scarcity and poor condition of available vessels, along with financial limitations, continue to challenge the market’s recovery. Türkiye’s market has seen a minor uptick in imports, which has yet to substantially influence local market conditions”.
“Overall, while there are signs of activity, significant challenges remain, and a strong external driver may be required to significantly alter the current market dynamics. The introduction of new tariffs by the U.S. has stirred economic uncertainty, with potential impacts including higher consumer prices and challenges for domestic industries. These tariffs might also prompt retaliatory actions from affected trading partners, risking a broader trade conflict. Indeed, swift retaliation has already been seen from Canada and Mexico, who have imposed their own tariffs in response, affecting goods like alcohol and fruit from the U.S. The exact outcomes are speculative, but they underscore the delicate balance in global trade dynamics and the potential for escalating tensions”, Best Oasis concluded.
In a separate report this week, shipbroker Intermodal added that “the major ship recycling markets remained sluggish last week, weighed down by uncertainty over U.S. tariff policies, financing constraints, a limited supply of candidates, and regional setbacks due to religious festivities. In India the market experienced a slowdown last week, influenced by the Holi festivities, amid a scarcity of recycling candidates. Market sentiment has been dampened by President Trump’s tariff announcements, which have introduced uncertainty. The steel sector is facing oversupply, prompting the government to consider anti-dumping measures on low-cost imports to safeguard domestic producers. On a positive note, inflation declined more than expected in February, reaching 3.6%, while speculation about potential interest rate reductions has fuelled optimism for improvement of business activity. Bangladesh continues to grapple with a series of problems, including high unemployment, subdued business activity, financial constraints and persistent inflation. In the ship recycling sector, the ongoing scarcity of LCs remains a major hurdle for buyers, limiting their purchasing capacity despite a rising demand for vessels in the 8,000–12,000-ton range.
Meanwhile, the exchange rate of the local currency against the U.S. dollar remained stable. In Pakistan the ship recycling market continues to witness activity, with recyclers displaying a keen interest in vessel acquisitions despite continued difficulties in securing LCs and financing. However, the availability of recycling candidates remains limited, as improving freight markets, particularly in the dry bulk sector, have led owners to reassess their options and delay scrapping decisions. The steel market remains sluggish, affected by the Ramadan. Broader economic struggles persist, despite financial aid and loan repayment extensions from the UAE and China. Mismanagement of funds has forced the government to implement budget cuts across multiple sectors, including ship recycling. Another lethargic week for the Turkish market, with the landscape remaining unchanged. On the economic front, the government continues to implement a contractionary monetary policy, aiming to gradually lower inflation rate to 24% from current 39%. The Turkish lira declined marginally against the U.S. dollar, closing at 36.51”, the shipbroker concluded.
Source: Nikos Roussanoglou, Hellenic Shipping News Worldwide
