Ship Recycling Industry Faces Tonnage Shortage at Major Destinations

The shortage of ship recycling tonnage continues
According to Marine Link, the shortage of tonnage in major ship recycling destinations persists, with some hope for improvement by 2024. India faces challenges such as fluctuating steel prices and competition from cheap Chinese steel, impacting the struggling ship recycling sector. Meanwhile, dry bulk freight rates continue to unexpectedly thrive.
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The ship recycling industry is facing a shortage of available tonnage at major ship recycling destinations, according to reports from cash buyer GMS. While smaller LDT candidates have been offered for sale recently, there is not enough tonnage to meet basic needs. Indian subcontinent markets are slowly regaining their share of ship shipments, while Bangladeshi and Pakistani markets remain strong despite the start of Ramadan. The Indian market, however, is struggling due to fluctuating steel prices, weakening currency, upcoming elections, and the influx of cheap Chinese steel.

India’s ship recycling sector is facing challenges from cheap Chinese billets flooding the market, reminiscent of the second ship recycling recession in 2015. Despite efforts to prevent undercutting of domestic steel through taxes and tariffs, the issue of cheap Chinese steel remains a concern. The global ship recycling markets, however, remain relatively stable due to the high number of ships available for recycling.

Dry bulk freight rates are experiencing an unexpected boom, raising questions about the sustainability of the trend in the long term. Additionally, the container sector has not seen significant uptick in recycling volumes, indicating a different trend compared to the dry bulk sector. GMS highlights the competitiveness in the market, where cash buyers are competing to offer the best value for ships, regardless of prevailing market conditions.

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