Red Sea crisis affects old ship recycling market

The crisis in the Middle East and the decision by many shipowners to reroute ships around the Cape of Good Hope is consolidating the market and keeping freight rates skyrocketing, which is affecting the market for recycling old ships.

Workers recycle old ships

Workers recycle old ships (Photo: GMS)

This comes at a time when many expect dry bulk and container shipping to ease as deliveries continue to arrive and with the Lunar New Year approaching next month, GMS, the world's largest buyer of end-of-life ships, said in its latest report on the recycling market.

Bangladesh and Pakistan have both become signatories to the Hong Kong Convention in 2023. There is likely to be facility upgrades in both countries and Norway, along with the IMO, has committed to funding the recycling sector of Bangladesh. This follows financial support from the Japanese Government and the Japan Shipowners’ Association last year.

Overall, the market in the subcontinent remains quiet and price increases are unlikely before the Lunar New Year, GMS said. Two MSC container ships recently arrived at Alang, a continuation of the container line's major handling program over the past year. MSC is said to have sold more than 15 ships since January 2023.

The 12,677 ldt MSC Jemima, built in 1994, arrived at Alang on 24 January and the 6,878 ldt MSC Eagle F, built in 2000, arrived on 26 January.

Meanwhile, recycling yards in Türkiye remain quiet.

In the fourth week of the year, Bangladesh ranked first, with typical prices of $550 per ldt for containers, $530 for tankers and $510 for bulk carriers. The market there is improving, GMS said. Next is Pakistan, with popular prices down about 10 USD and sentiment also improving. India follows at around $20 with a weak market. A similar situation prevails in Türkiye, where regular prices are 360 USD, 350 USD and 340 USD respectively.

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