Ship Recyclers Set for Positive Year-End
The Baltic Exchange’s main sea freight index eased for the fourth straight session on Friday, falling close to 0.5%, its lowest since July 2023. “This has certainly assisted the ship recycling sector with the supply of tonnage of late, fueling its survival into early 2025,” says cash buyer GMS.
“As we stand on the edge of the final weeks of 2024, compared to the rest of the year, it certainly seems as though there has been more of an uptick in the markets of late, in addition to a far more positive conclusion for ship the recycling sector in the Indian sub-continent, as news of fixtures on the back of firming levels has kept recyclers busy taking deliveries at the various waterfronts over recent weeks.”
Though the markets are not reaching the coveted USD 500/LDT mark yet, they have come out of a Q2 – Q3 and even early Q4, low.
Supply is expected to remain steady or likely improve into 2025 despite trading markets performing impressively as they drive the global fleet to its highest average age it has ever been. Increasing newbuild constructions in 2025 should phase out older units faster and ensure a steadier recycling supply.
“Additionally, despite China’s stimulus announcements promising stronger measures for its economy, Capesize bulkers managed to lose ground even further, and all eyes will now be peeled on the Trump’s incoming tariffs that will manifest once he takes office from January 20, including the tariffs he intends to impose on China, in particular,” says GMS.
In the interim, as global economies continue to find stable footing, the U.S. Dollar strengthens across the recycling board, all whilst local steel plate prices in both China and (consequently) India saw their levels decline in unison this week. This further exemplifies the unending problem of cheaper steel being dumped into sub-continent markets, which has seriously afflicted sub-continent steel prices for most of the year despite punitive tariffs being in place.
As recycling yards in Bangladesh and Pakistan remain in limbo, focus should now be on upgrading facilities by June of next year, in time to accede to the Hong Kong Convention. And with most yards in India already compliant, it falls squarely upon regional competitors to undertake improvements or risk missing out on recycling tonnage entirely.
Turkey, with all of its legal framework in place for the safe recycling of ships, continues to struggle for tonnage.
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