Monsoon Dampens Ship Recycling Momentum in India: STAR ASIA Reports

Monsoon Dampens Ship Recycling Momentum in India: STAR ASIA Reports

The time has come!! next week! On June 26, 2025, the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC) will officially come into force, over 16 years after its adoption by the International Maritime Organisation (IMO). The long-awaited implementation marks a historic step forward for global ship recycling standards.

Yet, while the regulatory milestone signals progress, the industry faces immediate and significant challenges.

A severe shortage of HKC-compliant recycling facilities across key shipbreaking nations threatens to derail momentum.

In Pakistan, currently 7 yards have completed about ~ 80% of the works and are expecting in a matter of 4 to 6 weeks to get the HKC certification, while Bangladesh counts only 12 compliant yards, and although India leads with over 100 certified facilities, many remain underutilised due to weak supply. Compounding matters are falling scrap prices Indian recycling rates are down 15% over the past month. Activity across the subcontinent has slowed markedly, and shipowner expectations remain unmet amid a stagnant market.

Paradoxically, the current low supply of end-of-life vessels may be masking a more severe bottleneck. A sudden influx of tonnage could easily overwhelm available capacity, triggering delays, price instability, and logistical strain.

Despite these near-term pressures, the HKC’s enforcement is a defining moment. It establishes a global benchmark for sustainable ship recycling and could catalyse future investments in compliant infrastructure and ESG-aligned practices.

The transition will be complex, but the industry now has a clear regulatory foundation on which to build a safer and more sustainable future.

Alang, India

The ship recycling markets entered a subdued phase this week, with activity slowing considerably due to the onset of the monsoon season and continued weakness in underlying steel demand.

Offered prices for ships have dropped sharply, now ranging between US$ 410–420 per light displacement tonne (LDT) for a typical bulker, a notable decline from levels in the US$450’s just a month ago. The correction is closely mirrored in domestic scrap markets, where melting scrap prices have fallen by approximately 3.5% month-on-month and ship plate prices have declined by around 5.5%.

Overall sentiment remains cautious, with the market currently at a crossroads and taking direction from evolving global geopolitical dynamics, as well eyes on the developments in Bangladesh and Pakistan on the upcoming deadline of implementation of HKC.

Anchorage & Beaching Position (MAY 2025)

Chattogram, Bangladesh

The ship recycling industry is bracing for disruption as the 26th of June deadline for compliance with the Hong Kong Convention (HKC) rapidly approaches. With just days remaining, uncertainty hangs over whether local authorities will grant an extension for yards still completing upgrades to meet HKC standards. The lack of clarity has cast a shadow over market sentiment, bringing much of the sector to a standstill.

There are a number of ships lined up waiting for their fate as the urgently needed No Objection Certificate (NOC) has yet to be released. It is understood that this coming week some recyclers are awaiting the court directions.

Recyclers who have yet to secure HKC certification are at risk of being sidelined from operations, with empty yards and no clear timeline for resumption. This could lead to a sharp drop in ship scrap availability, as certified yards, now in the minority, are exercising caution, opting only for selective acquisitions of end-of-life vessels.

The impact is expected to be the most severe in the smaller ship segments, particularly vessels arriving from Far Eastern markets, which now face limited recycling options.

Anchorage & Beaching Position (May 2025)

Gadani, Pakistan

Markets remained at a standstill this week as recyclers adopted a wait-and-watch approach ahead of the crucial 26th June deadline for the enforcement of the Hong Kong Convention (HKC). Uncertainty hangs over key recycling hubs such as Gadani, where no yards have yet secured HKC certification, though compliance work remains underway.

The core issue now lies in the standoff between federal and local authorities. While the federal government is pushing for full HKC implementation from the deadline onwards, local officials are advocating for a temporary extension. Such a reprieve would allow recyclers to complete necessary audits while continuing operations.

Without an extension, the industry faces potential paralysis, with many fearing a significant disruption in ship recycling activity if uncertified yards are barred from transacting.

The coming weeks will be pivotal for the ship recycling industry, as recyclers await regulatory clarity. Until a resolution is reached, fresh vessel sales are expected to remain on hold, with the industry adopting a cautious stance.

Anchorage & Beaching Position (MAY 2025)

Aliaga, Turkey

Another lacklustre week in the Turkey shipbreaking sector. Rates remain around US$260/ton as it has been for the last 7 weeks. No new activity to report.

Sub-Continent and Turkey ferrous scrap markets insights

India’s imported ferrous scrap market continues to struggle with weak buying interest and persistent bid-offer gaps. HMS 80:20 offers remained stuck in the US$338-342 per ton CFR range, while shredded scrap hovered at US$360-362 per ton CFR. UK-origin HMS commanded US$345 per ton CFR Mundra, with shredded at US$365-370, and premium grades like PNS and busheling reached US$375 per ton CFR. Australian HMS offers stood at US$345-350 per ton CFR, but Indian buyers maintained resistance with bids closer to US$340 per tonne, reflecting their reluctance to accept current price levels.

Bangladesh showed moderately positive sentiment as most domestic steel mills resumed operations, indicating improved production stability. Scrap procurement activity picked up slightly with several mills cautiously re-entering the import market, gesturing early confidence in steel demand recovery. Australian shredded scrap was quoted at US$365-366 per ton CFR with recent tradable levels at US$355-360. However, larger bulk bookings remained limited as mills continued monitoring both global and domestic market trends closely.

Pakistan’s scrap market remained subdued with limited activity as mills maintained caution amid weak finished steel sales. EU-origin shredded scrap offers climbed above US$370 per ton CFR Qasim, with many suppliers quoting US$375 or higher. UK-origin shredded at US$370 per ton disappeared from the market as sellers pushed prices upward. UAE shredded offers reached US$385 per ton CFR while HMS-PNS mix traded in the US$376-378 range. Mills showed little urgency to procure, preferring to wait for either market corrections or clearer demand signals before making fresh commitments.

Turkey’s imported scrap prices gained upward momentum with US/Baltic-origin HMS 80:20 offers at US$348-350 per ton CFR and EU cargoes at US$340-345. Mills resisted offers above US$340 per ton, citing weak finished steel demand and tight margins. UK recyclers reported limited summer availability, keeping sellers’ firm on pricing despite Turkish mills needing around 20 cargoes for July shipments. Domestic rebar prices stood at US$535-545 per ton ex-works, depending on location, but demand remained weak in both domestic and export markets. Mills are expected to re-enter more actively only if fresh rebar orders emerge or scrap prices retreat.

Author: shipping inbox