GMS: Dramatic escalations in the Middle East still causing trouble

As GMS explains, starting with the comparatively minor achievement in their war against Russia, fleets of home-grown Ukrainian drones flew deeper into Russia, causing serious damage to military infrastructure and even civilian areas. This occurred as President Zelensky awaits being ‘green-lit’ to use Western-made long-range weapons.

The highlight of the week saw the IDF, IAF, and Mossad act with impressive precision and drop bunker-busting bombs on a six-building security complex in the Dahieh region of Beirut. This complex was reportedly erected to house senior Hezbollah members and their families, including a massive underground bunker below where Hezbollah leader Hassan Nasrallah was hiding and allegedly meeting with a senior Iranian Minister, plotting another October 7-style attack against Israel. The bombs decimated the entire complex, resulting in the top brass of Hezbollah being wiped out this week.

As parts of the Arab world celebrated Nasrallah’s death, the Islamic world reeled from his passing. Meanwhile, the Houthis once again targeted Ben Gurion airport with another ballistic missile just as Benjamin Netanyahu’s plane returned over the weekend from the recent U.N. Security Council Meeting in New York. This missile was intercepted by Israel’s Iron Dome, placing Yemen directly in Israeli crosshairs. Given that the IDF is maintaining its bombing campaign in Beirut targeting the remaining Hezbollah commanders, PM Netanyahu has also targeted Yemen and the Houthis in the south, as news of attacks on the port city of Hodeidah was coming forth at the time of writing.

As the warring factions of the Muslim Brotherhood escalate their retaliatory attacks against Israel and the U.S. prepares to send even more troops to the region, glaring new questions arise: how safe is the maritime sector, including passing merchant vessels, now that the testosterone to avenge the deaths of so many Islamic leaders is running high among increasingly trigger-happy militant groups? How will world economies suffer now that the Middle East is clearly at war, and the Red Sea lanes are sure to become a hotbed of activity? How will the ship recycling industry fare as a result of all this?

While GMS does not expect tonnage to flow into the markets anytime soon, nor do they expect ship recycling prices to skyrocket within this timeframe, the ship recycling industry did see some positive movements with improving indications breaking cover from India and even Bangladesh this week. Several bulker sales took center stage due to this week’s firming, while last week was clearly one for containers. India remains the primary recipient of recent fixtures, driven by firming local steel prices, more workable letters of credit, and even stabilizing demand. Bangladesh, meanwhile, is still struggling to get back on its feet after a torrid few months that saw PM Hasina resign and flee the country, an interim government struggling to regain control, and chronic flooding covering large swathes of the country.

Pakistan remains completely out of the picture, stranded far behind its subcontinent ship competitors who have only moved further this week. Finally, Turkey reported an accident at a local yard, adding further surprising news to the week. Overall, as India’s glimmer of hope stirs recycling sentiments from their summer slumber, only time will tell whether this pricing trend will pervade across all markets.

For Week 39 of 2024, GMS Market Rankings / vessel indications are as below:

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