Hungry recyclers see no ships on horizon

Recycling activity typically trails off during the monsoon season in Bangladesh, India, and Pakistan but rarely does a week go by without a single recycling sale.

The latest market report from GMS, the world’s largest cash buyer of end-of-life ships, cites the geopolitical events which have taken ‘centre stage’ across all shipping sectors. Including both the trading and recycling markets, the backdrop could well remain in place through both the third and fourth quarters of the year, the firm said.

Heightened tension in the Middle East generally, including the next phase of attacks on merchant ships in the Red Sea by the Houthis, are likely to keep freight rates artificially elevated for the next two to three months.  

While GMS did not mention this specifically, many ships’ crews are braving the fierce winter conditions around the Cape of Good Hope rather than risk the dangerous passage through the Red Sea. Extra tonne-miles are supporting freight rates in various sectors. 

Writing before the events of the weekend, GMS accurately predicted the downfall of Bangladesh Prime Minister, Sheikh Hasina, that is likely to propel the nation into deeper political and economic crisis. Meanwhile, in India, the fallout from the recent election and subsequent budget announcements have done little to allay the mounting concerns among recyclers in Alang.

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Pakistan still leads the nominal recycling price league but there have been no new arrivals on the Gadani waterfront for a month. None are expected. Meanwhile, with no recycling news out of Aliaga for more than a year, Turkish yards remain out of the picture, GMS said.    

In the absence of any deals, the theoretical recycling price table indicates Pakistani prices of $540 for container ships, $530 for tankers, and $510 for bulkers. Indian prices are $10 down across the board, Bangladesh a further $10, with Turkey at a theoretical $380, $370 and $360 respectively.