GMS: OFAC sanctions keep puzzling the recycling industry

This is now seeing cash buyers and ship recyclers being vigilant in their appropriate due diligence before negotiating on units, especially those deemed suspect, as there reportedly are still a few more units in cash buyer hands waiting to be introduced for a recycling resale. However, given the fate that the behemoth duo has run into outside Bangladesh, it remains to be seen how these pending and future dealings with candidates from sanctioned sources will eventually transpire.

For now, like 2024, the 2025 tsunami of economic tumult continues to surprise week after week, with macro fundamentals taking turns to shake up ever-changing sentiments across the board. Oil has started to jitter like the stock markets. Despite registering declines through the week and being low overall, it ended at a higher-than-last-week level of USD 69.40/barrel, as oil markets remain cautious on the back of recently announced Iranian and Venezuelan sanctions. On the flip side, and rather surprisingly, charter rates declined this week across the dry bulk board as nearly all sectors (Handies, Panamaxes, Capes, and even Supras) registered falls, dragging the overall Baltic Dry Sea Freight Index down. This was followed by a minor uptick in recycling inquiries from sellers at the bidding tables. While some discussions are still ongoing, local anchorages delivered a Margarita Mix of surprises as Pakistan took in more vessels than India this week, despite a clear overall decline in the number of arrivals and deliveries across the sub-continent board.

Zooming into domestic fundamentals of ship recycling markets, steel plate prices played opposite roles in Pakistan and India. While Indian levels recorded an impressive jump, Pakistani levels continue to bleed out, having declined non-stop over the last month. Meanwhile, Bangladeshi and Chinese levels continue to flatline at the bottom of the pool. Even the U.S. Dollar remained undecided against these currencies, making firm improvements against some while losing ground against others. Bangladesh seems surprisingly bullish despite ongoing Eid holidays and the end of Ramadan, likely due to a few hungry recyclers, while competing India and Pakistan struggled to keep up. This is despite a distinct lack in the availability of units for recycling sales as we end lucky number Week 13 and head into Q2. Prices in Bangladesh are slightly higher than USD 450/LT LDT on certain select/favored units (such as tankers and containers) coming in from the Far East. This has left India and Pakistan gravitating toward even smaller, geographically positioned units to satisfy their own permeating demand.

Finally, with the HKC June 26 deadline approaching and the deadline for yard upgrades in Bangladesh by March 31 not yet extended, a healthy number of domestic recyclers will be unable to import vessels post-Eid. Pakistan, meanwhile, is at the very early stages of starting upgrades and needs to do much more work in the months ahead to stay relevant, while Turkey surfs away into the distance on the back of a receding Lira. Q2? Phew!

For Week 13 of 2025, GMS Market Rankings / vessel indications are as below: