Ship Recycling: Market remains cautious amid mounting uncertainty triggered by the U.S. tariff escalation

Ship Recycling: Market remains cautious amid mounting uncertainty triggered by the U.S. tariff escalation

The ship recycling market remains cautious amid mounting uncertainty triggered by the U.S. tariff escalation, which is fast becoming a watershed moment for global shipping. Trade growth is slowing, supply chains are fracturing, and freight rates have turned increasingly volatile—spiking on pre-tariff cargo rushes, then slumping under protectionist drag. Container shipping, in particular, faces mounting pressure.’

A vast majority of ship recyclers are now asking: Will this geopolitical shock finally unleash the long-anticipated wave of end-of-life vessels? With global yard capacity constrained and the Hong Kong Convention’s entry into force approaching for the Sub-Continent yards, recyclers are bracing for a potential surge in tonnage while the yards are not fully ready. However, liquidity challenges in key recycling hubs like Pakistan and Bangladesh may limit their ability to absorb that supply without a sharp correction in pricing.

Market participants are closely watching whether a sudden influx of ageing ships will overwhelm existing capacity, trigger pricing volatility, or catalyse long-overdue consolidation in the sector. With shipowners reevaluating fleet deployment and margins tightening, the ship recycling market’s next phase may arrive sooner than expected.

On the other hand, the global steel industry received a reprieve following President Donald Trump’s latest tariff announcement. The White House confirmed that steel and aluminium imports already subject to Section 232 duties will be exempt from new reciprocal tariffs, providing modest relief to domestic buyers grappling with a 25% levy. Gold and copper were also excluded from the latest measures, signalling some policy flexibility from an administration that has aggressively targeted metals to bolster U.S. manufacturing.

The move follows Trump’s February decision to scrap all prior exemptions, escalating trade tensions. While steel prices have surged to year-long highs and shares of major producers rallied earlier this year, demand remains subdued due to weak construction activity, sticky inflation, and elevated interest rates.

U.S. steelmakers Nucor, Steel Dynamics, and U.S. Steel have all warned of disappointing first-quarter earnings. In contrast, aluminium stocks showed mixed performance, and copper declined as gold touched record highs in Asian trading.

Ship Recycling Market Snapshot

• All prices are USD per light displacement tonnage in the long
• The prices reported are net prices offered by the recycling
• Prices quoted are basis simple Japanese / Korean-built tonnages trading Premiums are paid on top of the above-quoted prices based on quality & quality of Spares, Non-Fe., bunkers, cargo history, and maintenance.

5-Year Ship Recycling Average Historical Prices

Ships Sold for Recycling

Alang, India

The domestic ship recycling markets posted a notable recovery this week, supported by a tightening supply of raw materials for local steel mills. Ship scrap prices rose approximately 5.5% month-on-month, reflecting improved demand and limited availability and to add, the INR has also strengthened, giving importers a sign of relief.

Additionally, vessel prices at Alang recorded a solid increase of around USD 20 per light displacement ton. The price uptick has further strengthened Alang’s competitiveness against its counterparts.

Industry experts remain optimistic about the near-term outlook for the ship recycling market in Alang, buoyed by strong underlying demand and a persistent shortage of raw materials. Prices for scrap vessels have continued to firm, and many believe the current momentum is set to carry forward, with further meaningful price improvements anticipated in the coming months.

However, uncertainty looms as turbulence in the global financial markets triggered by recent U.S.-led disruptions has sent shockwaves across the globe. This volatility has added a layer of caution among the ship recyclers and the cash buyers. They expect a clearer direction to emerge in the coming weeks, which will likely set the tone for the next phase of the industry’s trajectory.

Anchorage & Beaching Position (APRIL 2025)

Chattogram, Bangladesh

The ship recycling markets remained largely inactive this week due to the Eid celebrations, with limited transactional activity reported. Despite the holiday lull, overall demand remained steady and ship prices held firm.

Several vessels were sold in recent weeks, leaving most yards adequately stocked for the coming months. However, some recyclers who were unable to secure tonnage earlier are now offering higher prices in a bid to secure units ahead of the monsoon season and before the banks impose stricter restrictions on opening the Letters of Credit.

However, with the recent developments with the global retaliatory tariffs imposed by the U.S. the ship recyclers in Bangladesh are facing rising uncertainty after the U.S. imposed a 37% tariff on imports from the country. The decision has triggered concerns over a potential drop in export volumes, which could weigh heavily on the broader economy.

A key worry is the impact on foreign exchange reserves, as diminished export earnings may restrict access to U.S. dollars crucial for acquiring ships on the international market.

With financial conditions already tight, the tariff move is expected to further strain liquidity across the sector, adding to the challenges facing Bangladeshi recyclers in the months ahead.

Anchorage & Beaching Position (APRIL 2025)

Gadani, Pakistan

The ship recycling market remained subdued this week, with limited activity across the nation due to the ongoing Eid holidays. Despite the lull, price levels held steady, supported by firm underlying demand.

Pakistan’s recyclers have begun to narrow the gap with their counterparts in Alang, showing increased competitiveness. However, a continued shortage of tonnage has left yards across the region awaiting fresh supply, keeping activity restrained.

Meanwhile, anticipation is building around the approaching 26 June 2025 deadline for compliance with the Hong Kong Convention (HKC). Many facilities are in the final stages of preparing for certification, but the lack of incoming vessels is slowing operational progress.

While volumes remained low, market sentiment stayed largely positive. Demand remains intact, and participants are hopeful that activity will pick up as holiday-related disruptions ease and tonnage availability improves.

Anchorage & Beaching Position (APRIL 2025)

Aliaga, Turkey

The Turkish recycling sector experienced a quiet week due to Eid celebrations, with market levels remaining steady despite looming U.S. tariffs that could potentially impact regional steel demand through significant impositions on the EU.

Turkey’s economic confidence showed signs of recovery in March, rising by 1.6% m-o-m to 100.8, with notable improvement in consumer confidence increased to 85.9, though construction confidence continued its decline. While services and real sector confidence indices showed modest gains, retail trade confidence fell by 2.5 points during the same period.

Overall, the Turkish economy demonstrated resilience, growing by 3% in the last quarter of 2024.

Sub-Continent and Turkey ferrous scrap markets insights

The Sub-Continent Imported Scrap Market Sluggish Amid Post-Holiday Lull and Pricing Pressure.

Imported scrap markets across the Sub-Continent remained subdued this week, with buying activity constrained by pricing resistance, liquidity issues, and the post-Eid slowdown.

India’s scrap market stayed quiet as buyers resisted elevated offer levels, anticipating further price corrections. Shredded scrap was offered at US$390–400/ton CFR, while bids were capped at US$385–386/ton, limiting trade. UK-origin HMS 80:20 was available at US$365–370/ton CFR, and Turning scrap was offered at US$345/ton CFR. A bulk cargo from Japan to Chennai was heard at US$385–390/ton, but overall demand remained muted.

Pakistan’s market remained largely inactive due to Eid holidays and ongoing LC issues. Shredded scrap offers from the UK and EU stood at US$395–400/ton CFR Qasim, while buying interest remained lower at US$390–395/ton. Mills continued to operate at reduced capacity, and recovery in demand is expected to be gradual as buyers reassess market conditions.

Bangladesh’s scrap market also showed limited movement, with stable prices but weak demand. European HMS was offered at US$370–375/ton CFR, while US-origin HMS stood at US$380–384/ton CFR. Domestic ship scrap and rebar prices held steady, though uncertainty over Hong Kong Convention (HKC) compliance kept pressure on the ship recycling sector. Activity is likely to remain slow until mid-April.

Turkish scrap import activity remained in a holding pattern, as market participants awaited clarity on U.S. tariff developments and currency fluctuations. US-origin HMS 80:20 held steady at US$379/ton CFR, though buyers were bidding as low as US$365/ton. Mills have largely secured April and early May requirements, with limited fresh buying interest reported.

Across all regions, market sentiment remained cautious amid global uncertainty, with a modest recovery expected in the coming weeks.

Author: shipping inbox