Ship Recycling Market Stagnant Last Week

The ship recycling market was largely unchanged versus the previous weeks, as challenges remained last week as well. In its latest weekly report, Best Oasis (www.best-oasis.com), a leading cash buyer of ships said that “the ship recycling market remained largely stagnant across all key regions, with persistent challenges and minimal signs of recovery. In India, conditions continue to be hampered by the availability of cheaper imports and weak market demand, compounded by the monsoon season. In Bangladesh, the market sentiment remains subdued, characterized by inactivity and a lack of improvement. Recent discussions within the BSBRA on compliance issues, such as the responsibility for preparing the Inventory of Hazardous Materials, reflect ongoing efforts to address regulatory challenges, but tangible improvements in market activity have yet to be seen. In Pakistan, the decline in market rates is showing signs of slowing down, hinting that the bottom of the market might be near, with potential demand resurgence if prices dip slightly further”.

Best Oasis added that “meanwhile, Turkiye saw a slight increase in import rates, but local market sentiment remains unchanged with no notable improvement in activity or demand. Overall, the market continues to face headwinds, with any potential recovery dependent on further price adjustments and improved demand conditions across these regions. Global steel prices are likely to decline due to weakening demand, driven by China’s sluggish property sector and slowing economic momentum. Recent data shows a sharp drop in China’s iron ore prices, reflecting concerns over its struggling steel industry. In the U.S., manufacturing contraction and rising inventories signal subdued factory activity, further dampening steel demand. Overall, both demand and supply challenges amid a slowing global economy suggest continued downward pressure on steel prices”.

In a separate report, shipbroker Intermodal also noted that “the ship demolition market continues to face significant challenges with subdued activity in all major regions. A combination of weak local steel demand, cheap imports and regional economic difficulties has driven down prices, resulting in a stagnant market. The supply of vessels for recycling remains low as favorable freight rates keep vessels in service, further limiting activity. The Indian recycling market remains subdued due to weak local demand for steel and the continued influx of cheaper Chinese steel imports. Prices offered by recyclers have softened and the monsoon season has disrupted construction activity, further depressing market conditions. The continued depreciation of the Indian rupee is putting pressure on the sector as recyclers find it increasingly difficult to compete. Despite the government’s proposal to increase import duties on steel from 7.5% to around 11%, recyclers remain reluctant to increase their supply, awaiting clearer market signals.

In Bangladesh, the recent floods severely disrupted the market, although operations have now resumed. Despite this, demand for steel remains weak, with local mills underutilized and recyclers reluctant to raise prices. Giving a glimpse of hope to the recyclers, the Central Bank has made the L/C issuance easier, as it made the margin on imports zero. Recyclers face significant challenges in trying to stimulate market activity in such unfavorable conditions. The Pakistani market is showing some signs of stabilization, although demand remains weak. Easing inflation and the possibility of interest rate cuts may bring some relief to recyclers, as an improving macro picture can help receive an IMF loan amounting to $7bn. The region remains essentially off the market. Turkey, like the other regions, remains in a stagnant state. While there has been a slight improvement in imported scrap prices, local demand for steel remains flat. Inflation is high but falling, with August figures at 52%, significantly lower than July at 62%. Overall, the outlook for the ship recycling industry remains challenging across all regions, with no major recovery expected in the near term”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide