GMS: Firming global freight rates severely impact ship recycling

GMS attributes that to a set of factors such as the confusing budgets that were announced in both Bangladesh & even Pakistan this week. Furthermore, taxes and duties are to be imposed on FO / LO on incoming vessels in Bangladesh. Other reasons as listed by GMS include: 

• India’s first post-Election budget is due in July under the freshly formed coalition government.
• Alang Recyclers are still fresh in the wake of post-election abnormalities that are expected to become the norm.
• A Turkish market that is still figuring out which way the river is flowing.
• An expected increase in freight rates over the next few weeks as the Red Sea Shipping Lanes face increasing incursions on commercial liners.
• Fundamentals across the recycling board that are collectively jiggling their sides again.

The top global ship-recycling destinations look like they desperately need the intervention of one Mr. ‘Shaken, Not Stirred’, to successfully even out industry wide prime movers & calm the seas for at least the immediate future, if not the rest of the year.

Firming global freight rates have left the global ship recycling industry on life support over the last +5 quarters, whereby not only has wet tonnage almost completely steered clear of the bidding tables (for now), but firming dry rates are forecasted to further do so through July, ensuring that despite global warming likely to deliver a wetter than usual monsoon, ongoing economic circumstances are forecasted to keep domestic recycling yards drier through the rains (especially in Bangladesh & Pakistan). Pakistan’s budget announcement this week also seems to have delivered negative news for the nation whereby income taxes are reported to climb in anticipation of an upcoming tranche of IMF funding.

Smack in the middle is the Indian stock market that suffered sudden falls amidst the alarming possibility that PM Modi’s BJP party might not bag the votes needed to hold on to a 272-seat majority in the Parliament in order to maintain unfettered control over the nation’s economy, one that has registered further declines in fundamentals ever since. Finally, Turkey remains silent, both in performance and thereby in this report – at least until fresh tonnage electro-cardio-shocks this market enough to report something. Q3 seems increasingly destined to be the worst quarter for Turkish ship recycling since January 2023.

For week 24 of 2024, GMS demo rankings / pricing for the week are as below:

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