Ship Recycling Market Hopeful as Baltic Index Drops

There seems to be positivity in the ship recycling market as the Baltic Index’s main Sea Freight Index fell for its ninth consecutive week this week, dropping to its lowest levels of the year, reports cash buyer GMS.

“In essence, this decline especially affects older trading fleets, which in turn has seen all recycling markets register imports at their respective waterfronts this week, including a welcome return from Pakistan to the fray,” says GMS. “Fundamentals, though, continue to work towards diminishing (perhaps extinguishing) the desire to actively negotiate for tonnage as steel plate prices plummeted painfully in Bangladesh and India this week, likely reacting to the decline in steel from China recorded last week and even this week.

“Moreover, with the BRICS meeting arranged in Russia this week and is working towards the establishment of a mutually agreeable currency in order to displace the dominance of the U.S. Dollar; according to global economists, remains a hopeful vision at this point given that the IMF is largely funded by the United States and could see vastly unfolding economic uncertainties across the world who depend on the IMF / respective U.S. Dollar reserves. As a result, except China, where the Dollar appreciated 24 basis points against the CNY, recycling nation currencies dropped in Turkey, and remained depressed at other locations.”

Overall, global ship recycling markets seem to be struggling. Bangladesh has been unable to compete with India even on geographically positioned vessels. Despite having displayed encouraging signs from a couple of recyclers only recently, resulting in Pakistan finally celebrating a large LDT arrival at Gadani’s waterfront, Pakistan recedes into its dormancy once again, says GMS. Therefore, any of the few units being proposed for sale are being largely met with disappointingly low levels, all well below USD 500/LDT even for favored and usually better priced container units.

“Turkey continues to suffer coincidental declines, with their levels just waiting to drop any week now. As such, it seems more likely at this stage that prices will recede towards USD 450/LDT in the coming weeks, rather than rebound to (and over) the coveted USD 500/LDT mark as bleak times look to persist for the remainder of 2024.”