Ship Recycling: Alang facing uncertainty and a lack of market confidence: STAR ASIA
World’s leading Cash Buyers for ships sending for recycling STAR ASIA in their weekly ship recycling report opined that this week, BIMCO has established the Ship Recycling Alliance to promote safe and environmentally sound ship recycling practices. This initiative aims to unify the ship recycling and shipping industries, facilitating the global implementation of the Hong Kong International Convention for the Safe and Environmentally Sound Recycling of Ships (HKC). The HKC is set to enter into force on June 26, 2025, marking a significant step toward sustainable maritime operations.
The ship recycling industry faces mounting pressure to adapt, as over 15,000 vessels are expected to be dismantled over the next decade. Despite this, voluntary adoption of HKC-compliant recycling practices remains limited, highlighting an urgent need for unified industry efforts.
The newly launched Ship Recycling Alliance aims to bridge this gap by connecting stakeholders, advising regulators, and raising public awareness. “To ensure responsible and safe recycling, all stakeholders must step up,” emphasised BIMCO Secretary General David Loosley.
Collaboration with the International Maritime Organization (IMO) and the Basel Convention Secretariat to clarify legal frameworks and align compliance efforts will be a key focus.
The alliance’s founding members include BIMCO, regional ship recycling associations from South Asia and Turkey, major cash buyers, and other industry leaders, aiming to drive progress in sustainable ship recycling globally.
This week, SK Shipping, Korea, finalised the sale of four LNG tankers for green recycling, totalling 117,371 tons of light displacement tonnage (LDT). The transaction marks the largest single en-bloc sale of 2024, alongside regular MSC container vessels, fueling hopes for improved supply conditions in the recycling market.
Adding to the optimism, several ships from Chinese and other Asian markets is expected to hit the market in the coming weeks, further revitalising sentiment among recyclers. These developments have sparked renewed confidence in the ship recycling industry, signalling a potential upswing in activity.
Alang, India
The ship recycling markets in Alang remained subdued this week, with domestic ship scrap prices continuing to soften amid persistent uncertainty and a lack of market confidence. Despite steady demand for vessels, domestic ship scrap prices failed to hold, reflecting cautious sentiment across the region.
A vast majority of ship recyclers have shrugged off these minor dips in domestic ship scrap prices and continued their buying activities at the prevailing prices. Some are adopting a wait-and-see approach, dampening activity levels and further weighing on domestic ship scrap pricing trends and forex fluctuations due to the strengthening of the U.S. dollar.
The present condition is a reflection of mixed sentiments with demand intact.
Chattogram, Bangladesh
Ship recyclers have maintained consistent price levels while showing renewed interest in acquiring vessels of all sizes for demolition. However, the current price strength appears narrowly focused on steel plates, against a backdrop of generally weak economic conditions. This selective demand could signal vulnerability to quick price reversals, a risk that recyclers likely factor into their calculations. Despite these mixed signals, the immediate outlook suggests potential improvement in vessel demolition prices as recyclers respond to the strengthening steel plate market.
Once again, Chattogram recyclers saw the supply of ships easing, especially from Chinese ship owners, due to its geographical location and better pricing compared to Alang.
Gadani, Pakistan
The local steel market remains sluggish, with demand showing little improvement despite expectations of recovery. Ship recyclers have maintained their prices, while imported scrap prices dropped by US$5-7/ton this week. However, traders remain hesitant to make fresh bookings.
Ship recyclers, meanwhile, are actively seeking tonnage as the short supply continues to haunt the industry, with Alang taking the major share of ships in the region due to their competitiveness and HKC-compliant ship recycling edge over Gadani as the local recyclers remain cautious about raising offers due to weak market conditions.
While there are signs of domestic economic growth, significant changes in ship recycling prices are unlikely in the near term. Depending on market dynamics, a marginal increase may be possible in the coming weeks.
Aliaga, Turkey
Turkish scrap markets are experiencing diverse pricing dynamics this week, as mills adjust their purchasing strategies according to individual needs. Recent transactions highlight a downward trend in import values, with fresh EU-origin bookings setting new price benchmarks.
The market now confronts the possibility of prices dropping below US$350/t cfr, a level unseen since early this year. Opinion remains divided on recovery prospects, with some viewing current EU and UK cargo sales as temporary pressure points, while others anticipate sustained weakness.
Sub-Continent and Turkey ferrous scrap markets insight
The Sub-Continent ferrous scrap market experienced a price decline of US$2-4/ton day-on-day this week, driven by tepid demand and persistent market challenges.
In India, Domestic scrap consumption remains subdued, with shredded offers from the US and UK/Europe assessed at US$390-392/ton CFR Nhava Sheva, down US$4/ton d-o-d. HMS (80:20) from UK/Europe stood at $365/t CFR, while West African material was priced at US$370-375/ton CFR. Market insiders noted muted buying, influenced by stock surpluses, poor steel sales, and monsoon disruptions.
In Pakistan, weak rebar demand and smog-related logistical challenges slowed purchases. Shredded offers were priced at US$390-395/ton CFR Qasim, while mills held off, anticipating further price drops.
Financial constraints in Bangladesh, high inventories, and letter of credit issues curtailed buying. UK-origin shredded prices dropped to US$396/ton CFR Chattogram, while buyers delayed commitments in anticipation of lower rates.
In Turkey, the market softened as Baltic-origin HMS (80:20) dropped to US$356-360/ton CFR, reflecting weaker euro-driven pricing. Traders expect potential demand recovery for January shipments.
Global uncertainties and cautious buying strategies have kept the regional scrap market under pressure.
