GMS: Knuckle-Biting Third Quarter for Ship Recyclers
Cash buyer GMS predicts a knuckle-biter of a third quarter for ship recycling, given that:
• (confusing) budgets were announced in Bangladesh and Pakistan this week
• taxes and duties are to be imposed on FO / LO on incoming vessels in Bangladesh
• India’s first post-election budget is due in July under the freshly formed coalition government
• Alang recyclers are still fresh in the wake of post-election abnormalities that are expected to become the norm
• a Turkish market that is still figuring out which way the river is flowing
• an expected increase in freight rates over the next few weeks as the Red Sea shipping lanes face increasing incursions on commercial liners, and
• fundamentals across the recycling board that are collectively jiggling their sides again.
Firming global freight rates have left the global ship recycling industry on life support over the last +5 quarters, whereby not only has wet tonnage almost completely steered cleared of the bidding tables (for now), but firming dry rates are forecasted to further do so through July, says GMS. This is ensuring that, despite global warming likely to deliver a wetter than usual monsoon, ongoing economic circumstances are forecasted to keep domestic recycling yards drier through the rains (especially in Bangladesh and Pakistan).
“Pakistan’s budget announcement this week also seems to have delivered negative news for the nation whereby income taxes are reported to climb in anticipation of an upcoming tranche of IMF funding.”
The Indian stock market suffered sudden falls amidst the alarming possibility that PM Modi’s BJP party might not bag the votes needed to hold on to 272 seat majority in the Parliament in order to maintain unfettered control over the nation’s economy, one that has registered further declines in fundamentals ever since.
Turkey remains silent. Q3 seems increasingly destined to be the worst quarter for Turkish ship recycling since January 2023.
For week 24 of 2024, GMS demo rankings / pricings are: