Ship Recycling: Demand levels remain stable at the current price: STAR ASIA
The ship recycling markets in the Sub-continent have maintained their footing, with demand levels remaining stable at current prices. A persistent shortage in the supply of vessels has helped keep prices elevated, even as broader economic conditions weighed on the sector earlier this year.
Recent sales in the region have demonstrated price resilience, reversing an earlier slump caused by declining domestic scrap prices. With these prices stabilising, recyclers are regaining confidence, reinforcing the market’s strength.
Looking ahead, the market could see some relief in supply constraints. The freight markets, particularly in the dry bulk sector, are undergoing a correction, which may prompt an uptick in the number of vessels headed for recycling. This anticipated adjustment could balance the currently tight supply-demand dynamics, offering recyclers more opportunities to secure cargo while moderating price pressures.
Industry will closely monitor these developments, especially as global economic conditions and freight market trends continue to shape the trajectory of the recycling sector in the Subcontinent.
Alang, India
The ship recycling market remained static this week, with prices lingering at the previous subdued levels.
Steel demand has remained moderate this week, defying the traditional post-Diwali uptick usually driven by the initiation of new construction projects.
The ship recycling industry continues to face a challenging year, marked by significant uncertainty due to a limited supply of vessels. This scarcity has reshaped business dynamics, forcing a large number of secondary mills reliant on ship scrap to shut down. India’s position as the world’s second-largest steel producer has further disrupted the demand-supply equilibrium, creating imbalances that ripple across the industry. Market players are closely monitoring these shifts as the combination of subdued steel demand and constrained ship supply tests the resilience of recyclers and associated sectors.
Chattogram, Bangladesh
This week, Bangladeshi ship recyclers emerged as market leaders, leveraging a significant price advantage over their regional counterparts. A notable number of bulk carriers, which under normal circumstances might have headed to Gaddani in Pakistan or Alang in India due to their closer proximity, were instead committed to Chattogram.
The substantial price differential offered by Bangladeshi yards has made Chattogram the preferred destination for shipowners seeking optimal returns on their vessels. This development highlights Bangladesh’s competitive edge in the regional recycling market, driven by its ability to outbid neighbouring countries consistently.
Gadani, Pakistan
The ship recycling market showed little movement this week, with conditions largely unchanged from the previous period. Industry sentiment remains subdued, reflecting persistent challenges and weak demand.
Ship recyclers, facing a persistent shortage of vessels, continue to wait in anticipation for improved supply. Meanwhile, efforts to ensure compliance with the Hong Kong International Convention (HKC) are in full swing across the yards.
The drive to meet international safety and environmental standards has become a priority, even as the lack of ships poses challenges to operational activity. Recyclers
remain hopeful that a recovery in vessel supply will coincide with the industry’s progress toward sustainable and compliant practices.
Anchorage & Beaching Position (November 2024)
Aliaga, Turkey
Turkish steel mills have adjusted their domestic buying prices downward this week, reflecting the ongoing decline in imported scrap prices.
Market dynamics remain complex, with supply currently outpacing demand and steel sales stalling due to continuing price uncertainty. Supplier notes that steel producers are waiting for scrap prices to stabilize before expecting any improvement in steel sales. The outlook is further complicated by approaching winter conditions and holiday seasons, which could impact scrap supply. Some market participants suggest that Turkey may face challenges securing January shipment cargoes at current or lower price levels.
In response to these market conditions, Turkish mills have reduced their long steel prices due to difficulties in both domestic and export markets. Domestic rebar offers have decreased to US$575/t ex-works from last week, while shipbreaking scrap prices have fallen to US$350/t delivered, down from US$365/ton.
Sub-Continent and Turkey ferrous scrap markets insight
The Sub-Continent ferrous scrap market saw subdued activity this week, with weak automotive and construction sectors in India following Diwali contributing to muted demand. Pakistan witnessed moderate buying ahead of the winter season, while Bangladesh faced limited buyer interest amid financial constraints and a struggling infrastructure sector. Meanwhile, Turkish mills continued to exert pressure on prices, aiming to offload inventories before the New Year.
India’s imported scrap market remained stable, with demand stagnant due to weak performance in the automotive and construction industries. Ongoing rains in several states further impeded recovery. Market insiders indicated that regional rebar price fluctuations offered no signs of long-term improvement.
Buyers bid US$360/ton for HMS from Africa, while sellers held firm at US$365-368/ton, creating a bid-offer disparity. Offers for shredded scrap from the UK and EU were quoted at US$384-385/ton, and HMS at US$362-364/ton CFR West Coast India. A UK-based supplier remarked that “UK scrap export prices are unlikely to rise before Christmas,” citing lackluster demand from Asian buyers.
Pakistan’s imported scrap market remained quiet, though buying activity picked up slightly in preparation for the December holidays. Suppliers quoted $390/t for UK/EU- origin scrap, with deals concluded at US$388-389/ton for 10,000-12,000 t this week.
Locally sourced scrap prices remain higher by PKR 1,000-2,000/t (US$4-7/ton), driving mills to prefer imports during the restocking season.
Bangladesh’s imported scrap market remained sluggish, impacted by limited buyer interest and weak steel demand. Offers for EU/UK-origin shredded were at US$385- 388/ton CFR Chattogram, though bids were lower as buyers awaited further price corrections.
The Turkish imported ferrous scrap market remained stable day-on-day, with US-origin bulk HMS (80:20) offers assessed at US$340/ton CFR. Turkish mills continued to push prices lower, citing slow finished steel sales and diminished scrap import interest.
Deals for Baltic and US-origin HMS were concluded at US$337.5/ton and US$342/ton, respectively. Buyer targets for US/Baltic-origin HMS (80:20) fell further to US$330/ton CFR. Mills are reportedly aiming to reduce inventories before year-end, with one market participant stating, “Everyone is trying to enter the New Year without stock.”
