Freight Rates Frustrate Recyclers
A recent and ongoing uptick in freight rates across many sectors (especially dry, as wet rates have been performing far admirably in comparison) has resumed depriving global ship recycling markets of tonnage over the last couple of weeks, reports cash buyer GMS.
“This has promptly manifested itself at the various sub-continent waterfronts this week in both India and even Pakistan that has now returned to an empty port position once again, resulting in a quieter time of late.”
Even the struggling Panamax sector saw a bounce in rates this week with owners of vintage 90s-built units seemingly managing to fix their vessels out yet again.
Whilst January saw a plethora of sales from the Panamax bulker and LNG sectors, but the inevitable slowdown over Chinese New Year holidays and the release of Trump’s tariffs both added to market volatility.
The tariffs still in the pipeline have pulled the barrel back closer to USD 70/barrel this week, as recent sanctions coupled with growing U.S. oil reserves could continue to see the barrel buoying around the early USD 70s in the near future.
Whilst global economies adjust around these unfolding market dynamics, key fundamentals continue to experience volatility given that local steel plate prices are either vacationing or laying horizontal in key markets while registering declines in others.
“Ship recycling markets offerings have fallen by up to USD 30/LDT over the first month of the year and while further pressures on key drivers seem to have been working in unison to pull recycling offers further down, the lack of tonnage has seemingly found a price floor around USD 450/LDT despite indications far below on certain units are easily forthcoming.”
The urge to buy tonnage might return in the final month of Q1 2025 as Pakistan has come back into the picture of late, securing a smaller LDT unit after a significant period on the sidelines. “But it remains too little too late for a market that has seen just one arrival at the nation’s waterfront since Qctober 2024.”
Bangladeshi ship recyclers are picking up the pace on respective facility and infrastructure upgrades, with the Hong Kong Convention finally entering into force by July of this year. Urgent yard upgrades are still needed in Chattogram, and especially in Gadani, to ensure compliance with the convention.
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