Ship Recycling: Rising inventories from external factors concerns at Alang: STAR ASIA
The ship recycling markets in the Sub-Continent and Turkey maintained overall stability this week, with buying activity steady at prevailing price levels. Despite this, the persistent scarcity of end-of-life vessels continues to exert upward pressure on prices, keeping the market constrained.
Once again, a ray of hope has emerged for the recycling industry as recent corrections in freight rates hint at a potential increase in the availability of ships for recycling. Ship recyclers are cautiously hopeful that shipowners, encouraged by lower freight earnings, may soon bring more ageing vessels to market—a long-awaited development for recyclers.
However, the ship recycling industry remains realistic about the pace of recovery, recognising that while freight rate adjustments are a positive sign, it may take time for this to translate into tangible improvements in ship supply. For now, the sector is bracing for steady conditions, with recyclers closely monitoring global shipping trends for signs of change.
Alang, India
Local steel demand remains subdued, with prices under strain due to rising inventories from external factors, imported ferrous scrap and other semi-finished steel products.
Despite the subdued market, ship recyclers have maintained last week’s price levels for recycling tonnages. Local steel plate prices, while unchanged, have yet to recover from the sharp declines earlier this October. Domestic ferrous markets are trying hard to regain the prices but facing strong resistance from the underlying demand.
On the other hand the central bank has stepped in to stabilise currency fluctuations using its robust forex reserves.
Market sentiment remains dampened, and ship recycling prices are likely to remain steady with potential for marginal downward pressure.
The coming weeks have some exciting ships in the pipeline for green recycling, which would set a tone and give further clues on the strength of the markets.
Chattogram, Bangladesh
The local steel market continues to show diverse trends, echoing last week’s developments. While finished steel demand remains weak due to a slowdown in new construction projects and ample inventory, local steel plate prices have risen by US$3/MT this week, marking a cumulative US$38/MT increase over the past seven weeks. This reflects limited supply in contrast to market demand.
Ship recyclers are maintaining their offer prices at last week’s levels while actively seeking fresh tonnages. However, government policies requiring ship recyclers to demonstrate compliance with Hong Kong Convention (HKC) standards before granting import permits pose a significant bottleneck. While the potential for price improvement exists, these regulatory constraints are likely to keep recycling prices steady in the short term.
Overall a stable market at prevailing prices with demand intact.
Gadani, Pakistan
Local steel demand remains under pressure, with prices continuing to stagnate. Ship recyclers held their offered prices steady this week, while imported scrap prices saw a slight decline. To boost sales and address liquidity concerns, local scrap prices equivalent to shredded material dropped significantly, falling by US$15–18/MT. Similarly, rebar prices declined by US$18/MT, reflecting ongoing market challenges and its direct results on the ship pricing.
The influx of cheaper steel imports from Iran is further intensifying pricing pressures. Additionally, poor air quality and smog in several regions have disrupted construction activities, limiting any potential rebound in steel demand.
While no new ship recycling deals were concluded this week, recyclers actively pursued fresh tonnages, with several vessels under negotiation. However, market dynamics suggest that recycling prices are likely to remain steady in the near term, with the potential for marginal downward adjustments given the weak demand and challenging economic conditions.
Aliaga, Turkey
Turkish scrap import prices have plummeted to their lowest levels since November 2022, with a notable UK-origin HMS 1&2 80:20 cargo transaction closing at US$340/ton CFR.
The downward pressure is evident across various supply sources, including German cargo and reported Baltic shipments. The bearish sentiment has impacted domestic steel markets, forcing Turkish mills to reduce their rebar offers to US$585-600/ton ex-works, as they grapple with weak domestic and export demand.
Domestic shipbreaking scrap prices have similarly adjusted downward, settling at US$365/ton delivered, compared to last week’s range. Against this backdrop of market weakness, the Turkish lira closed at 34.59 against the US dollar, further complicating the trading environment for local mills.
Sub-Continent and Turkey ferrous scrap markets insight
The Sub-Continent imported scrap market continued to face downward pressure this week, with prices showing mixed signals amidst weak demand across key regions. The sluggish steel market and expectations of further price declines kept buyer interest low, particularly in India. Pakistan experienced moderate activity, though liquidity constraints weighed on purchasing. Bangladesh reported some bulk deals, but final confirmations remained pending. Meanwhile, Turkey’s market remained stagnant as mills refrained from buying, citing weak demand for end products and competition from cheaper Chinese billets.
Demand for imported scrap in India remained subdued as a slow-moving steel market, and expectations of further price reductions dampened buyer interest. Offers for shredded scrap from the UK/Europe were quoted at US$385–390/ton CFR Nhava Sheva, while HMS (80:20) was priced at US$365/ton CFR. West African HMS (80:20) offers ranged between US$365–375/ton CFR, depending on the loading port.
A supplier remarked, “Indian demand is already low, and the decline in Turkish prices has added pressure. Suppliers are struggling to lower prices due to high procurement costs, leaving the market outlook uncertain.” A trade source added, “Buyers are reluctant to commit, finding every reason to negotiate in a highly unfavourable market.”
Pakistan’s scrap market saw moderate activity, with buyers closely monitoring global trends and waiting for potentially lower offers. Shredded scrap prices from the UK/Europe stood at US$385–390/ton CFR Qasim. Domestic rebar sales showed slight improvement but remained below expectations, prompting cautious purchasing strategies. Production levels hovered around 30–40%, with rebar prices at PKR 250,000–255,000/ton ex-Karachi and PKR 245,000–248,000/t ex-Punjab.
“If Turkish prices drop further, scrap may touch US$370–375/ton,” noted a mill official. However, liquidity challenges and sufficient inventories for the next 15 days have slowed activity. A supplier added, “Buying interest exists at US$385–390/ton, but no offers are available at US$380/ton. Prices are likely to stay stable with only four working weeks left this year.”
Bangladesh saw moderate activity with reports of bulk deals, though confirmations were still awaited. Transactions included 30,000 t of US-origin HMS (80:20) at US$370/ton CFR Chattogram, shredded scrap at US$375/ton CFR, and bonus scrap at US$380/ton CFR. A separate deal for 25,000–30,000 t of Australian HMS (80:20) was reported at US$370– 375/ton CFR Chattogram. Additionally, a Japanese bulk vessel carrying 10,000 t of shindachi and busheling scrap was booked at US$385–390/ton CFR.
The local market remained muted due to limited government projects and ongoing financing difficulties. Rebar prices were quoted at BDT 75,000–80,000/ton ex-Dhaka and BDT 80,000–84,000/ton ex-Chattogram.
The Turkish scrap market remained flat, with US-origin bulk HMS (80:20) prices holding steady at US$343/ton CFR. Mills displayed little interest in new purchases, citing weak demand for finished products and competition from lower-priced Chinese billets.
Despite a bearish market, some recyclers expressed optimism, suggesting prices might have bottomed.
Others pointed to ample dockside supply, with limited movement expected in December due to seasonal factors.
While sellers hoped for alternative demand from South Asia, the near-term outlook remains uncertain as mills continue to adopt a wait-and-see approach.
