Although geopolitical and commercial changes may intensify the sense of uncertainty for shipowners, activity in ship recycling continues to be recorded as sluggish.
Under this prism, a recent report by the shipbroker G. Moundreas outlines the forces and factors contributing to the continued slowdown in the pace of ship recycling. According to the report, this trend is a product of weak steel demand, currency exchange rate volatility, and increasing regulatory pressures.
Amid these adverse conditions, shipbreaking yards in India, Turkey, and Bangladesh are “seeing” their activity shrink. Specifically, Indian shipbreaking yards remain under pressure, as the rupee continues to weaken, while duties and sanctions have shaken buyer confidence. Similarly, in Turkey, adverse “winds” in the domestic economy continue to negatively affect ship recycling.
At the same time, Bangladesh is burdened by domestic political instability, falling steel plate prices, and a limited number of operational shipyards. All this comes on top of the delays in meeting the requirements of the Hong Kong Convention, which restrict activity in Bangladesh’s shipbreaking yards. In fact, G. Moundreas emphasizes that compliance with the convention is expected to play a decisive role in shaping the volume of recycling and the overall market climate in the fourth quarter of the year.
Within this landscape, Pakistan is the only “bright” exception. The Pakistani ship recycling market is showing unexpected resilience, favored by stable fundamentals in the steel market and a relatively stable currency.
