The ship recycling market is currently facing a period of stagnation, as reflected in the latest reports from key industry players. Best Oasis, a prominent cash buyer of ships, noted that recent weeks have seen little variation across major recycling markets. The mood remains subdued, with seasonal pressures in India due to the approaching monsoon impacting steel demand and leaving many end users hesitant.
The market’s outlook appears bleak, with pessimism dominating short-term forecasts. In Bangladesh, buyers are adopting a wait-and-see approach as they anticipate the enforcement of the Hong Kong Convention on June 26. The limited availability of compliant yards poses a significant obstacle, as most are already occupied with previous transactions.
This lack of capacity suggests the market will likely remain quiet until the second half of next month. In Pakistan, recyclers are also taking a cautious stance despite temporary allowances for non-HKC-compliant transactions, further contributing to the market’s inactivity. Meanwhile, Türkiye continues its usual pattern of stagnation, with both sentiment and activity at a standstill.
Geopolitical concerns, particularly surrounding the Israel-Iran conflict, are adding to the market’s fragility. The potential implications for trade routes, inflation, and capital flows are closely watched as oil prices respond to ongoing tensions. Intermodal, another shipbroker, emphasized that geopolitical tensions and the impending implementation of the Hong Kong Convention dominated discussions in the recycling market.
In Bangladesh, preparations for HKC enforcement are in full swing, with several yards receiving certification. However, the monsoon season has muted market activity, leading to a cautious holding pattern among buyers. Economic support in Bangladesh is bolstered by significant loan approvals from the Asian Development Bank and World Bank, which are essential amid prevailing uncertainties.
In contrast, India continues to grapple with the pressures of the monsoon and new steel guidelines, while Pakistan remains cautious, particularly given its reliance on Iranian oil and the ongoing Middle Eastern conflict. Overall, the ship recycling market shows signs of stabilization, but challenges persist.