Strong Dollar Dampens India’s Ship Recycling Market: BEST OASIS
World’s leading cash buyers for ships sending for recycling, BEST OASIS in their weekly ship recycling report opined that, the global ship recycling industry displayed mixed trends this week, with India witnessing subdued activity due to currency pressures, while Bangladesh maintained firm momentum. Pakistan continued to struggle with inactivity, and Türkiye showed early signs of recovery in underlying fundamentals, although vessel prices remained unchanged.
In India, the ship recycling market faced a slowdown in buying interest, largely attributed to the strengthening of the US dollar. The appreciation of the dollar has made imports significantly more expensive for domestic recyclers, thereby reducing their appetite for acquiring end-of-life vessels. Industry participants reported that the currency movement has directly impacted sentiment, forcing buyers to adopt a cautious approach.
The Indian rupee weakened to 94.86 against the US dollar this week, compared to 93.43 in the previous week, marking a depreciation of 1.43 points. This sharp movement has increased the cost burden on ship recyclers, who rely heavily on imports priced in dollars. As a result, market activity has softened, with fewer deals being concluded.
Adding to the cautious outlook is the ongoing process related to the Document of Authorization for Ship Recycling (DASR). The regulatory framework, which is expected to streamline compliance and align India’s recycling practices with global standards, is still under progress. Market participants anticipate its completion within the next two to three months. While the initiative is seen as a positive long-term step, the current uncertainty has contributed to short-term hesitation among buyers.
Price indicators in India reflected the subdued sentiment. Ship recycling rates declined by approximately 2.47% week-on-week, with container vessels priced around USD 410 per light displacement ton (LDT), tankers at USD 395/LDT, and bulk carriers at USD 380/LDT. Despite a marginal increase in domestic scrap prices—HMS 1&2 (80:20) rising to USD 385 and shredded scrap to USD 395—the gains were insufficient to offset the impact of currency fluctuations.
In contrast, Bangladesh’s ship recycling market remained firm, supported by steady demand and an improving political environment. Industry sources indicated that recyclers in Chattogram continued to show healthy interest in available tonnage, ensuring stable pricing levels across vessel categories.
The Bangladeshi taka remained largely stable against the US dollar, trading at 122.68 compared to 122.70 in the previous week. This minimal fluctuation helped maintain cost predictability for local buyers, contributing to the overall stability of the market. Prices for ship recycling remained unchanged, with containers at USD 455/LDT, tankers at USD 445/LDT, and bulkers at USD 420/LDT.
Market sentiment in Bangladesh has also been buoyed by recent political developments, which have created a more optimistic business environment. While no major policy changes were announced during the week, the improved outlook has reinforced confidence among industry stakeholders.
Pakistan, however, continued to lag behind its regional counterparts. The ship recycling market remained largely inactive, with no new vessels reported to have been offered for recycling. Industry participants noted that the market is still not fully operational, which has severely limited activity and momentum.
The Pakistani rupee saw a marginal decline, trading at 279.09 against the US dollar compared to 278.79 in the previous week. Despite this slight movement, the broader issue remains the lack of operational readiness within the sector. Ship recycling prices in Pakistan remained unchanged, with containers at USD 430/LDT, tankers at USD 415/LDT, and bulkers at USD 405/LDT.
In Türkiye, the ship recycling market showed some encouraging signs, particularly in terms of improving fundamentals. Import scrap prices increased by approximately USD 8, while domestic steel prices rose by around USD 10. These developments suggest a gradual strengthening of demand within the local steel sector.
However, despite these positive indicators, vessel prices have yet to reflect any upward movement. Current rates remain at USD 290/LDT for containers, USD 280/LDT for tankers, and USD 270/LDT for bulkers. Market participants are closely monitoring the situation, with expectations that clearer price direction may emerge in the coming week.
The Turkish lira weakened slightly to 44.43 against the US dollar, compared to 44.31 in the previous week. While the currency movement was relatively modest, it continues to be a factor influencing import costs and overall market dynamics.
Globally, the price of benchmark scrap materials showed mixed trends. HMS 1&2 (80:20) prices remained stable across India, Bangladesh, and Pakistan at USD 385, while Türkiye recorded a higher level at USD 390. Shredded scrap prices were also steady in South Asia at USD 395 but higher in Türkiye at USD 410, reflecting stronger local demand.
Among reported transactions this week, the bulk carrier Ocean Rosemary, with a light displacement tonnage of 8,783.1, was sold for delivery in Chattogram, Bangladesh, at a price of USD 470/LDT. Other vessels, including Toro and Star Gate, were also sold, though their prices remained undisclosed.
Overall, the global ship recycling market continues to reflect regional disparities shaped by currency movements, domestic demand, and regulatory developments. While India grapples with the impact of a strong dollar and transitional regulatory processes, Bangladesh stands out as a stable and resilient market. Pakistan’s recovery remains uncertain, and Türkiye’s improving fundamentals offer cautious optimism for the weeks ahead.
Industry stakeholders will be closely watching currency trends, steel prices, and policy developments, which are expected to play a crucial role in determining the market’s trajectory in the near term.
Author: shipping inbox
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