Weekly Ship Recycling Report by BEST OASIS

19 August 2023 – 25 August 2023

Highlights of the Week

The European Commission (EC) initiated an online consultation aimed at assessing the efficacy of its Ship Recycling Regulation, which remained open for participation until the beginning of June 2023. The findings of this study are anticipated to yield a positive impact on the quantity of ships being recycled in an environmentally conscious manner. It is plausible that ship owners who neglect to adhere to responsible recycling practices may encounter punitive measures in the forthcoming period.

Global crude steel production increased by 6.6% in July to 158.5 million tonnes (mt) from 148.9 million tonnes (mt) in the same month of the previous year.

According to the World Steel Association, China produced 90.8 mt of steel in July, an increase of 11.5%. India’s production increased by 14.3 percent to 11.5 mt. The steel production in Japan and the United States increased by 0.9% and 0.5%, respectively, to 7.4 metric tons and 6.8 metric tons. The output of South Korea and Brazil decreased by 9% and 4.7%, respectively, to 5.7 mt and 2.7 mt. Production in the United States and Russia was estimated at 6.9 mt and 6.3 mt, respectively, an increase of 0.5% and 5.8% year-over-year (y-o-y). Germany’s production decreased by 0.5 percent to 3.0 mt. Turkey’s output increased by 6.4% to 2.9 mt, while Iran’s output decreased by 1.5% to 2 mt.

In contrast to various other regions in Asia, such as China and Japan, Southeast Asia is poised to undergo a substantial transition towards the utilization of iron ore and coal-based blast furnace (BF) and basic oxygen furnace (BOF) capability in the next decade. This change is attributed, in part, to noteworthy investments supported by China. This implies that the area is expected to see an increase in demand for iron ore, as well as a projected 50% rise in scrap demand over the course of the next decade, according to analysts.

India –

The market seems to be presenting challenges; nonetheless, there is a sense of optimism for the future.

• India continues to face challenges on a daily basis, as buyers display a persistent interest in making purchases at specific price levels. Furthermore, discussions are underway regarding the potential inclusion of ship steel within the Bureau of Indian Standards (BIS), a development that would greatly benefit the recycling industry in India.
• There has been a notable increase in government support recently towards the industry, which is expected to provide additional assistance to recyclers in their efforts to meet pending requirements of the EUSRR Compliance.
• According to a recent survey of economists, the Indian economy likely grew by 7.8 percent in the April-June 2023 quarter. Strong domestic demand, government investments, and a tentative recovery in private investment are anticipated to have contributed substantially to GDP growth. The estimated range for GDP growth in the survey was between 7.5% and 8.5%.

Maersk’s journey towards sustainable shipbreaking in Alang

Bangladesh –

Current market conditions are characterized as slow, and buyers are in a state of watchful waiting.

• The current state of the local market can be characterized as exhibiting a degree of softness reflecting a lack of substantial demand and a continuous decline in local markets on a daily basis. Buyers, in their assessment, hold the belief that prices are likely to experience further decline in the near future.
• The issues pertaining to LC are progressively worsening with each passing day.
• As a recommendation, we continue to dissuade sellers from delivering their assets to this market and instead suggest that they sell their ships on an “as is, where is” basis.
• In the fiscal year spanning from July 2022 to June 2023, Bangladesh experienced a current account deficit amounting to approximately $3.3 billion, as reported by Bangladesh Bank (BB). 

India’s pricing situation continues to be underwhelming : Best Oasis

Pakistan –

This market exhibited an upward trend, but it remains to be seen whether this trend will persist.

• There is an apparent movement in the local market whereby the prices for scrap and other plate materials are experiencing an uptrend. 

• In the past, two vessels were sold to Gadani, and subsequently, an additional two vessels have been sold. There is some demand for 10-12k size vessels in the market, but it is limited to a few buyers, and the market remains buoyant because the exchange rate has been consistently increasing over the past few days.

• Furthermore, there exists a prevailing concern regarding the potential further depreciation of the currency, which may lead to a decline in its value to approximately 325/330 PKR levels in the coming months. Consequently, ship recyclers are motivated to expedite their inventory acquisition in order to preemptively mitigate any potential adverse effects resulting from this anticipated devaluation.

• The banks are opening LCs for their clients.

Alang ship recycling embraces cutting-edge technologies for sustainable practice

Türkiye –

The local market exhibits a state of stability characterized by a subdued level of activity.

• The current state of the market exhibits stability both in the local context and in terms of import dynamics. 
• The level of activity remains notably low.
• In a surprising turn of events, the Central Bank of Turkiye opted to increase the interest rate to 25 percent. This decision serves as a clear indication of the country’s departure from its previous policy stance, which prioritized the maintenance of low-interest rates.
• The Turkish lira appreciated by 1.5 percent against the dollar following the central bank’s announcement.

Credit : Best Oasis