Developments in Ship Recycling Markets: Challenges and Silver Linings
In recent weeks, there has been a noticeable uptick in ship recycling sentiments and vessel prices in both Pakistan and Bangladesh, hinting at a potential boost for the sub-continent recycling markets. However, despite these positive signs, the anticipation for an increase in tonnage supply has not materialized for both destinations. The only notable commitment comes from the Hong Kong Convention (HKC) compliant MSC containers, with four already committed in the first four weeks of 2024 to a limited number of pre-approved Alang yards.
Adding to the dynamics, Bangladesh, having officially ratified the Hong Kong Convention last year, received a significant boost as the Norwegian Government pledged US$ 1.364 million. This funding aims to contribute to the upgrade and transformation of Bangladeshi ship recycling yards, aligning them with environmentally friendly practices mandated by the HKC. This announcement, coupled with previous investments from the government of Japan and the Japanese Shipowner’s Association (JSA) in 2023, reflects a positive trend toward more sustainable standards in the global fleet’s end-of-life processes.
Meanwhile, pursuant to Bangladesh officially ratifying the Hong Kong Convention last year, reportedly this week, further news emanated via the announcement that the Norwegian Government is pledging US$ 1.364 million, in order to further help upgrade and transform Bangladeshi ship recycling yards into environmentally friendly recycling facilities that are increasingly operating in line with the requirements of the HKC.
As such, in addition to the investments and commitments already made by the government of Japan and the Japanese Shipowner’s Association (JSA) towards the upgrade of ship recycling facilities in Bangladesh last year, this week’s announcement is further good news to a market that has, of late, been increasingly reaching for better and more sustainable standards for the end of life needs of the global fleet.
Despite these positive strides, the Indian sub-continent ship recycling markets continue to face challenges due to the absence of meaningful tonnage. Steel plate prices in the region have remained largely stagnant, and currencies have seen minimal fluctuations. The market appears to be trudging along, making slow progress in its quest for better and more sustainable standards for ship recycling.
On a different note, Turkey finds itself in a challenging situation in the far West, with no movement in steel plate prices or local activity. The Lira struggles to find stable ground against the U.S. Dollar, slipping consistently every week.
In summary, while challenges persist in the ship recycling world, there are encouraging developments, especially in Bangladesh, where international support and funding contribute to the transformation of recycling yards. The broader sub-continent market remains cautiously optimistic, navigating through a modestly quiet week with hopes for increased tonnage supply in the future. Meanwhile, Turkey faces its own set of challenges, grappling with economic uncertainties and a lack of movement in local ship recycling activities.