Mixed Feelings in Ship Recycling Market

Cash buyer GMS reports that the international ship recycling community is finishing the year with mixed feelings.

“On the one hand, we have seen comparatively more deals concluded in 2023 than we did in 2022, with 2022 being the weakest of years over the last decade (in terms of the volume of vessels recycled in a single year). On the other hand, despite the industry witnessing a far firmer volume of vessels recycled this year, when compared to a bloated global newbuilding orderbook (particularly in the container sector), the recycling industry still fell short of the number of permanent exits needed in order to balance out global fleets.”

Prices have endured a rocky ride through much of 2023, with peaks well above and into USD 600/LDT being surpassed in the first half of the year, followed by the traditional summer / monsoon collapse that saw about USD 150/LDT wiped off in a few short months during the rains and even after.

Losses sustained by most ship owners, cash buyers and vessel recyclers have been particularly punishing for yet another year, says GMS.

“As a cheat sheet on the eve of the New Year, we would like to remind our readers that financing issues continue to persist in both Pakistan and Bangladesh – with a majority of their domestic banks still unwilling to sanction fresh financing / lines of credit on new vessel purchases, even though demand has been firming and domestic yards are starting to gradually empty out.”

There is cause for cautious optimism as international steel and commodity prices remain firm, with many believing vessel prices to have bottomed out across the sub-continent markets.

For week 52 of 2023, GMS demo rankings / pricing are: