Wednesday

02-04-2025 Vol 19

GMS Week 13

GMS Week 13 – CONFUSION! In last week’s GMS Weekly, it was noted that two VLCCs have encountered problems with USDN regulations and have become targets of OFAC sanctions. These ships remain stranded outside Bangladeshi waters, lacking any prospects for disposal. Consequently, cash buyers and ship recyclers are now exercising heightened due diligence before engaging in deals involving vessels that could be considered suspicious.

Reports suggest that there are additional units held by cash buyers that may soon be available for recycling. However, the difficulties faced by the two ships have raised questions about the viability of future transactions involving vessels from sanctioned sources. The economic landscape appears turbulent as we approach 2025, with macroeconomic fundamentals creating shifting sentiments weekly. Although oil prices experienced a decline throughout the week, they closed at USD 69.40 per barrel, slightly above last week’s level.

Caution prevails in the oil markets due to recently imposed sanctions on Iran and Venezuela. In a surprising development, charter rates across the dry bulk sector saw a decrease, impacting almost every segment, from Handies to Capes, contributing to a downturn in the Baltic Dry Sea Freight Index. Despite this, local recycling inquiries have seen a minor increase from sellers. Focusing on the ship recycling markets, steel plate prices diverged between India and Pakistan.

While India has experienced a notable uptick, prices in Pakistan have continuously declined over the past month. Meanwhile, Bangladeshi and Chinese levels remain stagnant. Despite the ongoing Eid celebrations and the conclusion of Ramadan, Bangladesh shows unexpected bullishness, possibly fueled by demand from local recyclers, whereas its competitors India and Pakistan grapple with a scarcity of available units. As the HKC deadline of June 26 approaches and the March 31 deadline for yard upgrades in Bangladesh looms, a significant number of domestic recyclers may be unable to import vessels after Eid.

Pakistan is only beginning its upgrade process and must put in considerable effort in the coming months to remain competitive, while Turkey continues to gain ground amid a weakening Lira. The outlook for Q2 remains uncertain.

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