According to GMS’ latest weekly ship-recycling report, the week saw a series of significant sanctions from President Biden targeting China’s COSCO and Russia, alongside growing economic volatility impacting global ship recycling markets.
This week marked President Biden’s sanctions against China’s national shipping arm COSCO, citing the company’s ties to the Chinese military and blacklisting its energy/tanker division. The octogenarian President went on a sanction spree, with the U.S. reportedly sanctioning over 180 vessels and dozens of entities in Russia, resulting in an unprecedented crackdown in the final days of his presidency.
Experts affirm that China’s COSCO sanction likely won’t have the same impact as the 2019 sanctions, but energy costs for nations on COSCO’s supply-chain routes may face inflationary hiccups, the full effects of which are yet to be realized. Even oil futures reported a bump as COSCO and Russia’s sanctions sent barrels soaring to US$ 76.57/barrel, a level not seen since last October.
The Baltic Dry Freight Index for dry bulk commodities jumped 8.2% by Friday, marking the second consecutive week of firming rates. Meanwhile, recycling traffic in India and Bangladesh continued to impress, especially in India, where the waterfronts reported a busy week of arrivals and deliveries.
The global economic situation also persists, with the U.S. Dollar continuing to drive up recycling nation currencies, including this week. Steel prices affecting ship recycling markets, including domestic levels, weakened, with China leading in declining/cheaper steel availability. How much India’s ongoing steel tariffs will support Alang’s performance, while Pakistani levels are close to an impending drop, remains to be seen.
Ship recycling nations endured a mixed performance this week. There has already been a marked contrast in workable candidates compared to the muted 2024, which saw the lowest volumes of units sold for recycling in over a decade. Several high-profile, larger LDT vessels, including LNGs and Panamax bulkers, are being offered for sale, after a period where smaller units, handy bulkers, and reefers dominated the market. It remains to be seen whether these older, sanctioned assets will find a destination or be left to rot as abandoned hazards at sea.
With the HKC coming into effect by mid-year, and yards yet to align with the convention’s requirements, 2025 may be another volatile year, with unpredictable events that can turn markets in an instant. Financial concerns for yards that have borrowed funds for upgrades could deepen, especially with ongoing tonnage shortages. Prices are likely to see continued volatility throughout the year, driven by unfolding sanctions affecting the vessel supply, particularly in the short term.
As this week ends, ship recycling destinations in the sub-continent remain largely unchanged, with no significant movement, even in Turkey, where only Lira fluctuations were noted. Viva 2025.
Rank | Location | Sentiment | Dry Bulk (USD / LDT) | Tankers (USD / LDT) | Containers (USD / LDT) |
---|---|---|---|---|---|
1 | Bangladesh | Stable | 460 / LDT | 480 / LDT | 490 / LDT |
2 | India | Stable | 455 / LDT | 475 / LDT | 485 / LDT |
3 | Pakistan | Stable | 450 / LDT | 470 / LDT | 480 / LDT |
4 | Turkey | Weak | 310 / LDT | 320 / LDT | 330 / LDT |