Waiting Game at Sea: Shipowners Pause Scrapping as Trade Winds Shift
Global ship recycling volumes experienced a dramatic slowdown in April as shipowners delayed decisions to scrap older vessels, according to the latest data from Lloyd’s List Intelligence. The total gross tonnage of vessels sent for recycling fell by 60% month-on-month, reversing the sharp uptick seen in the first quarter of the year.
Following a surge in beachings of larger vessels between January and March—driven in part by regulatory pressure and speculative trading moves—April’s sudden decline signals a shift in owner sentiment. Industry analysts suggest that this pause is linked to growing uncertainty over global trade dynamics and potential changes in tariffs and freight demand, particularly as key economies continue to negotiate trade terms.
Owners Opt to Wait
“There’s a sense that shipowners are holding back, waiting for more clarity on trade flows and market direction before committing to scrap tonnage,” said Peter Thorvaldsen, a senior analyst at Baltic Maritime Advisory. “We’ve seen this kind of hesitancy before when owners sense that values might rise or when charter markets tighten.”
Indeed, recent volatility in container and bulk freight markets—driven by ongoing supply chain realignments and geopolitical tensions—has left many owners reluctant to retire tonnage that could still yield income.
The decision to continue operating aging ships is supported by relatively firm charter rates across several sectors. Older Panamax and Handymax bulkers, in particular, have seen improved employment prospects in recent months, largely due to a modest recovery in Chinese commodity imports and a redirection of cargo flows away from the Red Sea due to ongoing security risks.
Q1 Surge Gives Way to Q2 Caution
The slowdown in April follows a robust start to 2025, during which demolition yards—especially in South Asia—received a steady stream of larger vessels, including Capesize bulkers and older VLCCs. According to Lloyd’s List Intelligence, more than 2.3 million gross tonnes were recycled in March alone, driven by a combination of tightening emissions regulations and softening earnings for certain ship classes.
However, April saw only around 920,000 gross tonnes recycled globally, marking the lowest monthly total since July 2023.
“Some of the backlog was cleared in Q1, but with uncertainty over trade negotiations between the US, China, and the EU, many owners are in wait-and-see mode,” said Anjali Ramesh, a shipping economist with MarEx Analytics. “They don’t want to get rid of ships that could be profitable if trade picks up again later this year.”
Demolition Yards Face Idle Time
The decline in scrapping activity has left many demolition yards underutilized, particularly in Alang, Gadani, and Chattogram. Several cash buyers have reported difficulty securing tonnage in recent weeks, despite offering competitive prices above $520 per light displacement tonne (ldt).
“The appetite is there from breakers, but the supply is not,” said one cash buyer based in Dubai. “Owners are playing a longer game, betting that earnings will improve or that uncertainty will clear up by the summer.”
Compounding the situation are tighter environmental regulations in the EU and looming ESG disclosure requirements, which could later influence scrapping decisions. But for now, the economics favor continued operation.
Outlook Hinges on Trade and Policy
Industry watchers suggest that ship recycling activity could pick up in the second half of the year, particularly if freight rates drop or clarity emerges from ongoing trade talks. However, others caution that recycling could remain subdued if older vessels continue to find employment.
For the time being, the global recycling sector must grapple with a quieter period, even as the long-term need to phase out aging, high-emission vessels remains a priority.
“The slowdown in April is more a pause than a reversal,” said Thorvaldsen. “But it underscores how sensitive ship recycling is to short-term market sentiment and policy uncertainty.”
