Ship Recycling Market Still Soft

The limited availability of suitable tonnage has restricted market activity, while the arrival of the monsoon season is expected to add further pressure in the near term. Further softening may be seen in the coming week, and the market will be closely watched to assess how conditions develop. In Bangladesh, the local market remained soft, with most HKC-compliant yards already holding adequate vessel inventories, limiting fresh buying interest. Prices had strengthened ahead of the budget on expectations of a significant duty increase. However, duties increased by only around USD 2–5, leading prices to decline again after the budget announcement. Buying interest remains limited, with buyers seeking good-quality vessels only at lower price levels, while owners continue to expect higher prices. Heavy rainfall over the past two to three weeks has also disrupted yard operations and slowed market activity. The Ministry of Industries recently visited several ship recycling yards, highlighting the government’s focus on strengthening the sector and restoring Bangladesh’s leading position in global ship recycling”.      Meanwhile, according to Best Oasis, in Pakistan, “market conditions remained largely unchanged, with yards awaiting fresh vessel supply. The recent decline in domestic shredded scrap prices is expected to put downward pressure on vessel values in the coming week, although the extent of the correction remains to be seen. Finally, in TürkiyeAliaga prices remained under pressure, with no improvement following the recent market correction. Sentiment stayed subdued amid the continued depreciation of the Turkish lira and limited availability of suitable recycling candidates. Yards maintained a preference for larger vessels, although the supply of such units remained scarce. The weaker lira continued to constrain Türkiye’s competitiveness against the Indian subcontinent”, Best Oasis concluded”, the report concluded.     

In a separate note this week, shipbroker Intermodalcommented that “India’s ship-recycling market is under pressure from a limited pool of candidates, cautious purchasing appetite and comparatively weak pricing, while the monsoon continues to disrupt yard operations. Although local prices have registered modest gains, underlying demand remains subdued. Renewed conflict in the Middle East has also reversed the rupee’s earlier strength, prompting RBI intervention and reviving inflation concerns as energy costs rise. At Chattogram, the market was operationally constrained and commercially defensive, with adequate vessel inventories, selective buying interest and persistent rainfall limiting fresh activity.      Recyclers continued to target suitable tonnage at discounted levels, while firm seller expectations restricted dealmaking. In the local steel market, flooding disrupted operations and cautious demand kept trading conditions soft. On the macro side, easing food costs helped moderate inflation, while plans to tap international debt markets through an overseas government bond could provide additional funding flexibility for budget -linked public expenditure.    

Pakistan’s hub was broadly stable, with yards positioned to absorb a stronger flow of candidates. However, sluggish steel demand and softer domestic shredded-scrap prices prompted a modest easing in recycler bids, despite continued appetite for suitable tonnage. Pakistan maintained a pricing advantage over India, potentially directing sellers towards the limited pool of active Gadani buyers. On the macro front, renewed Middle East tensions complicated LNG procurement, increasing reliance on costlier spot cargoes. The renewed Middle East disruption may enhance Gadani’s appeal as a conveniently located recycling destination, while simultaneously restricting vessel movements. At Aliaga, prices and sentiment remained weak as the continued depreciation of the lira erodes market competitiveness, while recycling tonnage remained limited”, the shipbroker concluded.