Price Increase Could Trigger More Ship Recycling Sales

Sales volume in the ship recycling market has remained in low level territory, however an increase in prices offered, could help spark a trend reversal in the coming week. In its latest weekly report, Best Oasis (www.best-oasis.com), one of the world’s leading cash buyers of ships, said that “ship recycling markets in four major destinations are experiencing varying trends. India’s market is on the rise, with a 10-15 USD increase in prices, mainly due to higher local steel prices, and this trend is expected to persist. Conversely, Bangladesh faces a market softening, attributed to upcoming festivities and holidays, alongside LC issues and reduced demand for local steel scrap, leading to fewer serious offers from recyclers and a potential further decline due to the Taka’s weakening”.

Best Oasis added that “Pakistan sees a deceleration in market activity as Ramadan and Eid holidays approach, with recyclers hesitant to close deals, a situation echoed in Turkey, which has entered a period of notable inactivity due to Ramadan and holiday observances. These developments underscore the complex interplay of local factors and global market dynamics affecting the ship recycling industry. Ship recycling has hit its lowest level in 20 years, influenced by market shocks, high demand, and small orderbooks, per BIMCO’s latest report. In Q1 2024, only two million deadweight tonnes of ship capacity were scrapped, continuing a trend of low recycling rates not seen since before the 2008 financial crisis.

Contributing factors include extended sailing distances due to security concerns in the Red Sea, sanctions on Russian exports, and changes in consumer behavior during the COVID pandemic. Despite the current downturn, BIMCO anticipates a rebound in recycling rates due to upcoming newbuild deliveries in the container sector and expected increases in the tanker sector, projecting a significant rise in ship recycling from 2023 to 2033. Oil prices have continued to rise, poised for a second consecutive week of gains, bolstered by geopolitical unrest in the Middle East, worries about dwindling supplies, and anticipation of demand increases alongside economic recovery”, Best Oasis said.

In a separate note, shipbroker Banchero Costa added this week that “with Easter and Ramadan behind us, there continues to be a lack of activity and limited excitement across the Indian subcontinent despite local fundamentals and prices remaining firm. Yards in Bangladesh and Pakistan remain active in their search to fill their yards however the lack of available units is doing little to satisfy the space. Sinokor have capitalised on this appetite however with the sale of their vintage container Vessel , the 1995 built SAWASDEE SINGAPORE approx. 7138 LDT at a very firm $602 LT / LDT into Chittagong based Buyers. However it remains to be seen if this sort of level could trigger some further activity after what has been a very quiet start to the year”, the shipbroker concluded.
Nikos Roussanoglou, Hellenic Shipping News Worldwide