Global Ship Recycling Wave Looms: Industry Braces for Massive Uptick by 2027
The global ship recycling industry is preparing for what many analysts are calling an unprecedented wave of vessels heading to scrapyards over the next two years. After a prolonged lull in recycling activity, major shipowners are now setting timelines for the disposal of older fleets — a trend that could reshape the balance between vessel supply and demand across key shipping segments.
According to industry insiders, several large shipowners are already planning significant increases in their recycling programs. One prominent owner revealed that their company’s recycling demand in 2026 is expected to be five times higher than in 2025, and by 2027, another fivefold increase is anticipated. If similar plans are echoed by other fleet operators, the global recycling market could be on the verge of a major turnaround — a “tsunami” of ships heading for their final voyage.
For now, the question remains: When will these ships actually start moving toward the beaches of Alang, Chattogram, and Gadani?
The industry has seen a large backlog of overaged vessels that have continued operating due to favorable freight markets and limited availability of replacement tonnage. However, this dynamic appears to be shifting. Freight rates, especially in the bulk and container segments, have begun to normalize after years of volatility, while compliance with stricter environmental and decarbonization rules is forcing owners to reconsider the operational viability of older ships.
With the Carbon Intensity Indicator (CII) and EU Emissions Trading System (ETS) already influencing ship economics, owners are expected to offload less efficient tonnage to avoid regulatory penalties and high carbon costs. “It’s no longer just about market rates or steel prices,” said a senior broker from Singapore. “Compliance costs, fuel efficiency targets, and charterer preferences for greener ships are pushing owners to make early recycling decisions.”
Traditionally, ship recycling activity has been influenced by steel prices and currency fluctuations in key recycling nations. India, Bangladesh, and Pakistan — the world’s top three shipbreaking destinations — have seen relatively stable steel markets in recent months, though domestic demand has remained subdued. However, recyclers are already preparing for higher intake volumes from mid-2025 onwards, expecting the trend to accelerate as older tonnage floods the market.
In Alang, industry observers note that many yards have been operating below capacity for the past two years. “We are hearing from brokers that a surge is coming,” said a leading Alang recycler. “Many large owners have ships over 20 years old, and by 2026, those vessels will be uneconomical to retrofit. Once the freight market cools further, we’ll see them arrive in waves.”
Analysts believe the upcoming surge could mirror — or even surpass — previous recycling booms seen in 2016 and 2020. But unlike past cycles driven purely by market conditions, this one will be heavily shaped by decarbonization and digital transformation pressures within global shipping. The transition to cleaner fuels, such as methanol and ammonia, and the rising cost of maintaining non-compliant vessels are creating a structural shift that could make older ships obsolete sooner than expected.
For recyclers, this shift presents both an opportunity and a challenge. The opportunity lies in higher volumes and improved yard utilization. The challenge, however, is ensuring compliance with international environmental and safety standards under the Hong Kong Convention for Safe and Environmentally Sound Recycling of Ships, which will enter into force in June 2025.
This means that recycling yards will need to be ready not just for higher capacity, but also for stricter documentation, worker safety, and hazardous waste management requirements. As one European cash buyer commented, “The real winners will be those yards that are compliant and prepared. When the wave comes, only certified recyclers will attract business from major shipowners.”
The next two years will therefore be decisive. If the projections hold true, the global ship recycling market could experience one of the busiest periods in its history by 2027 — a long-awaited supercycle driven by regulation, sustainability, and the natural aging of the world fleet.
In the words of one veteran shipbroker: “The ships are ready. The only question is — when will they begin their final voyage?”
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