GMS Anticipates a Glimmer of Hope for Ship-Recycling Industry in 2024
The ship-recycling industry faced a challenging 2023, culminating in a particularly dismal six-month tail end. However, as we step into 2024, there is a cautious optimism and a ray of hope for recovery, according to cash buyer GMS.
Multiple critical factors contributed to the industry’s struggles in 2023. Declining currency values, except in India, coupled with the flatlining or declining local steel plate prices, created a challenging environment. The ongoing lack of funding for fresh acquisitions in Bangladesh and Pakistan exacerbated the situation, with the summer and monsoon months of 2023 witnessing a convergence of these issues. Major ship recycling destinations experienced declining vessel prices, a shortage of fresh units, currency depreciations, and rampant global inflation.
Furthermore, the scarcity of financing options for ship recyclers in Bangladesh and Pakistan throughout much of 2023 resulted in a minimal number of concluded deals in these markets.
GMS notes that the rampant flat-lining of local steel plate prices in Bangladesh and Pakistan, coupled with the persistent volatility of 2023, sets the stage for a potentially quieter early 2024, especially until May. The anticipation of elections across various sub-continent locations may contribute to this subdued period.
While Bangladesh and India are not expecting significant changes in leadership or drastic shifts in the ongoing status quo, GMS suggests that this may or may not be the ideal news to stimulate their respective economies and drive much-needed growth for the rest of 2024. The ship-recycling industry remains cautiously optimistic, hoping for positive signs and a chance at recovery in the coming year.
Several critical factors contributed to the industry’s woes in 2023. Declining currency values, except in India, coupled with flatlining or declining local steel plate prices, created a challenging environment. The persistent lack of funding for fresh acquisitions in Bangladesh and Pakistan further exacerbated the situation. These issues converged during the summer and monsoon months of 2023, affecting major ship recycling destinations globally.
The consequences were widespread, including declining vessel prices, a shortage of fresh units, currency depreciations, and rampant global inflation. Financing challenges plagued ship recyclers in Bangladesh and Pakistan throughout the year, leading to a minimal number of concluded deals in these markets.
GMS highlights that the flatlining of local steel plate prices in Bangladesh and Pakistan was a result of the volatility that characterized much of 2023. The early months of 2024, especially until May, are expected to be relatively quiet. Elections are anticipated in various sub-continent locations, contributing to this subdued period.
Bangladesh and India are not anticipating significant changes in leadership or drastic shifts in the ongoing status quo. While this may or may not be the most encouraging news for stimulating their respective economies, GMS suggests that the ship-recycling industry might experience a quieter start to 2024. However, the hope remains that positive signs and potential recovery will gain momentum later in the year, bringing much-needed growth to the industry.
